Sheldon, Inc. declared a stock dividend of 50,000 shares on a date when the company's common stock was selling for $18 per share. Prior to this date, Sheldon had 500,000 outstanding shares of $1 par value common stock. As a result of this stock dividend, Sheldon's common stock will ________, the additional paid-in-capital will ________, and the retained earnings will ________

A) decrease $50,000; decrease $850,000; increase $900,000
B) increase $900,000; not change; decrease $900,000
C) increase $50,000; increase $850,000; decrease $900,000
D) decrease $50,000; decrease $850,000; not change

Answer: C
Explanation: C) 50,000 × $1 par = increase $50,000; 50,000 × $17 APIC = $850,000 increase; 50,000 × $18 market value = $900,000 decrease as transfer from RE to contributed capital. This is a small stock dividend (10%).