CUMULATIVE PARTICIPATING PREFERRED DIVIDENDS. The capital stock of Barr Company includes:

REQUIRED:
1. Determine the amount of dividends that will be paid to Barr’s common and preferred stockholders in 19x5.
2. If Barr paid $280,000 of dividends, determine how much each group of stockholders would receive.

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Capital stock: Common stock, $10 par, 150,000 shares outstanding Preferred stock, 12%, $100 par, 5,000 shares outstanding $1,500,000 500,000 As of December 31, 19x4, 3 years' dividends are in arrears on the preferred stock. Dur- ing 19x5 Barr plans to pay dividends that total $460,000.