Toms Wear issued a 10% stock dividend. The balance in retained earnings at the

time of the dividend was $45,000. There were 15,000 shares outstanding on the day

of the dividend. The $1 par value stock had a market price of $17.25 on the day of

the dividend. Total shareholders equity will increase (decrease) by:

a. $4,500.

b. $1,500.

c. $25,875.

d. $0.