A company has 2,500 shares of $50 par value, 5.0% cumulative and nonparticipating preferred stock and 25,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $6,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

a)$12,500.

b)$250.

c)$6,000.

$6,500.

d)$6,250.

Dividend amount is $6,250 ($2.5 x 2500 or .05 x 125,000). With a cumulative dividend do I add an additional $250? I don't understand the cumulative principle when the previous years dividend was not $6,250.