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When Crossett Corporation was organized in January, Year 1, it immediately issued 4,100 shares of...

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Accounting

When Crossett Corporation was organized in January, Year 1, it immediately issued 4,100 shares of $52 par, 5 percent, cumulative preferred stock and 10,000 shares of $11 par common stock. Its earnings history is as follows: Year 1, net loss of $15,000; Year 2, net income of $124,000; Year 3, net income of $220,000. The corporation did not pay a dividend in Year 1.
Required
A) How much is the dividend arrearage as of January 1, Year 2?
B) Assume that the board of directors declares a $54,500 cash dividend at the end of Year 2(remember that the Year 1 and Year 2 preferred dividends are due). How will the dividend be divided between the preferred and common stockholders?
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