2 A B C D F E When Crossett Corporation was organized in January Year 1, it immediately issued 4,000 shares of $50 par, 6 percent, cumulative preferred stock and 50,000 shares of $20 par common stock. G H J K L 4,000 $50 6% 50,000 $20 3 Its earnings history is as follows: Year 1, net loss of $35,000; Year 2, net income of $125,000; Year 3, net income of $215,000. The corporation did not pay a dividend in Year 1. $35,000 $125,000 $215,000 5 Required 4567890 7 (Use the cells from the given information above to complete this question.) 10 a. How much is the dividend arrearage as of January 1, Year 2? b. Assume that the board of directors declares a $25,000 cash dividend at the end of Year 2 (remember 11 that the Year 1 and Year 2 preferred dividends are due). 12 How will the dividend be divided between the preferred and common stockholders? 13 14 (Use the cells from the given information and from Required A to complete this question.) 15 (Amounts to be deducted should be indicated with a minus sign.) 16 17 18 19 Total dividend declared 20 Year 1 Arrearage 21 Year 2 Preferred dividends 22 Available for common 23 Distributed to common 24 Total distribution Distributed to Shareholders Amount Preferred Common $25,000