A corporation that has both preferred and common stock has a deficit in accumulated earnings and profits at the beginning of the year. The current earnings and profits are $25,000. The corporation makes a dividend distribution of $20,000 to the preferred shareholders and $10,000 to the common shareholders. How will the preferred and common shareholders report these distributions? Preferred - $20,000 dividend income; common - $10,000 dividend income. Preferred - $15,000 dividend income; common - $10,000 dividend income. Preferred - $20,000 return of capital; common - $10,000 return of capital. Preferred - $20,000 dividend income; common - $5,000 dividend income, $5,000 return of capital.