PREFERRED AND COMMON STOCK DIVIDENDS Yossarian Corporation has a single class of common stock and a single class of cumulative preferred stock. The cumulative preferred stock requires the corporation to pay an annual dividend of $3,750 to preferred stockholders. On January 1, 2009, Yossarian’s preferred dividends were one year in arrears, which means that Yossarian declared neither preferred nor common dividends in 2008. During the three years (2009–2011), Yossarian’s board of directors determined they would be able to pay $5,000, $7,000, and

$13,000, respectively.

Required:

Show how these anticipated payments will be split between preferred and common stockholders.

Cornerstone Exercise