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On January 31, 2018, Village Bank had 480,000 shares of $2 par value common stock outstanding. On that date, the company declared a 9% stock

On January 31, 2018, Village Bank had 480,000 shares of $2 par value common stock outstanding. On that date, the company declared a 9% stock dividend when the market price of the stock was $42 per share. The immediate effect of this dividend upon Village Bank was:

  • A reduction in cash of $1,814,400.

  • A reduction in retained earnings of $1,814,400.

  • A reduction in retained earnings of $86,400.

  • A liability to the stockholders of $86,400.

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