On September 30 2018 Saucier Company declared a 5 stock divi

On September 30, 2018, Saucier Company declared a 5% stock dividend when its stock was selling for $10 per share. As a result, Saucier Company will issue 20,000 additional shares of its $2 par value common stock. All outstanding shares were originally issued for $6 per share. What will be the decrease to stockholders’ equity as a result of the declaration and distribution of the stock dividend?

Multiple Choice

$0

$60,000

$200,000

$20,000

Solution

Declaration and recording of stock dividend with a decrease in Retained earnings and with a corresponding Increase in the Common stock along with Increase in Additional paid in capital.

Due to this there is no change in Stockholders equity.

S answer is $0.