Alien World reported the following financial information as at December 31, 2018:

Common capital: 250,000 shares no par issued and outstanding$1,000,000

Preferred capital: 8% 50,000 shares $ 250,000

Retained earnings $ 700,000

Alien World reported a loss of $127,000 for the year. The shares mentioned above were outstanding throughout 2018. The company declared and paid cash dividends of $105,000 for 2018. Dividends had been declared every year except for the two years prior to the current year. [30] ASSUME FOR THIS QUESTION that the preferred shares were cumulative and non-participating. How much will each shareholder group receive?

Select one:

a.

$80,000 to Common and $25,000 (the remaining balance) to Preferred. This is so as the common shareholders carry more risk and so should be paid at least at the same rate, 8% , as the preferred and paid before the preferred since the preferred are non-participating

b.

$25,000 to Preferred and $80,000 to Common. The remaining dividend arrears could be paid in later years when more dividends are declared

c.

$Zero to Preferred and all $105,000 to Common as the latter have not received any dividends for three years

d.

$60,000 to Preferred and $45,000 to Common and thus first payoff all off the past arrears of preferred dividends

e.

Company cannot pay any dividends since it made a loss in 2018