Problem:
On October 1, 2013, Chief Corporation declared and issued a 14% stock dividend. Before this date, Chief had 89,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:
- Not change.
- Increase by $124,600.
- Decrease by $126,100.
- Decrease by $124,600.
Note: Please describe comprehensively and provide step by step solution.