Analyzing Convertible Preferred Stock Xerox Corp. reports the following stockholders' equity information in its 10-K report. Shareholders' Equity (in millions, except par value) Series A convertible preferred stock Common stock, $1 par value December 31 2018 2017 $214 $214 Additional paid-in capital Treasury stock, at cost Retained earnings $232 $255 3,321 3,893 (55) 0 5,072 4,856 Accumulated other comprehensive loss (3,565) (3,748) Xerox shareholders' equity $5,005 $5,256 Preferred Stock As of December 31, 2018, we had one class of preferred stock outstanding. We have issued 180,000 shares of Series B Convertible Perpetual Preferred Stock that have an aggregate liquidation value of $180 and a carrying value of $214. The Series B Convertible Preferred Stock pays quarterly cash dividends at a rate of 8% per year. Each share of Preferred Stock is convertible at any time, at the option of the holder, into 37.4532 shares of common stock for a total of 6,742 thousand shares (reflecting an initial conversion price of approximately $26.70 per share of common stock), subject to customary anti-dilution adjustments. Required a. At December 31, 2018, Xerox reports $214 million of 8% Series B Convertible Preferred stock. What is the dollar amount of dividends that Xerox must pay on this stock (assume a par value of $1,000 per share)? b. Describe the effects that will occur to Xerox's balance sheet and its income statement when the Convertible Preferred stock is converted. Oon the balance sheet, the preferred stock balance is eliminated and retained earnings is increased by the same amount. Oon the balance sheet, the preferred stock balance is eliminated and total contributed capital is increased by the same amount. Oon the balance sheet, the preferred stock balance is eliminated and treasury stock is decreased by the same amount. Oon the balance sheet, the preferred stock balance is eliminated and accumulated other comprehensive income is increased by the same amount.