Paul Bunyan is the owner of noncumulative 8 percent preferred stock in the Broadview Corporation, which had no earnings or profits in 2014. In 2015, the corporation had large profits and a surplus from which it might properly have declared dividends. However, the directors refused to do so, using the surplus instead to purchase goods necessary for the corporation’s expanding business. The corporation earned a small profit in 2016. The directors at the end of 2016 declared a 10 percent dividend on the common stock and an 8 percent dividend on the preferred stock without paying preferred dividends for 2015.

a. Is Bunyan entitled to dividends for 2014? For 2015?

b. Is Bunyan entitled to a dividend of 10 percent rather than 8 percent in 2016?