Basil Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:

Year 1: $10,000 Year 2: 45,000 Year 3: 90,000

Determine the dividends in arrears for preferred stock for the second year. a. $25,000 c. $0 b. $10,000 d. $30,000