11-6 Accounting for cumulative preferred dividends

Exercise 11.6A (Algo) Accounting for cumulative preferred dividends LO 11.3 When Crossett Corporation was organized in January, Year 1, it immediately issued 4,400 shares of $51 pat, 5 percent, cumulative preferred stock and 8.500 shares of $8 par common stock, its earnings history is as follows: Year 1 , net loss of $15.800, Year 2 , net income of $113,000, Year 3 , net income of $98,900. The corporation did not pay a dividend in Year 1. Required a. How much is the dividend arrearage as of January 1 , Year z ? b. Assume that the board of directors declares a $34,940 cash dividend at the end of Year 2 (remember that the Year 1 and Year 2 pieferred dividends are due), How wil the dividend be divided between the preferred and common stockholders