Blue Ridge Corporation received a charter that authorized the issuance of 103,000 shares of $3 common stock and 21,000 shares of $100 par, 4% cumulative preferred stock. Blue Ridge completed the following transactions during its first two years of operation:

Year 1

Jan 5 Sold 15,450 shares of the $3 par common stock for $5 per share.

Jan 12 Sold 2,100 shares of the 4% preferred stock for $110 per share.

Apr 5 Sold 20,600 shares of the $3 par common stock for $7 per share.

Dec 31 During the year, earned $812,800 in cash revenue and paid $240,400 for cash operating expenses.

Dec 31 Declared the cash dividend on the outstanding shares of preferred stock for Year 1.

Year 2

Feb 15 Paid the cash dividend declared on December 31, Year 1

Based on the stock information above, if Blue Ridge Corporation did not declare a dividend in Year 1, but then declared a $25,000 dividend for both preferred and common stockholders, which statement is true?

- A dividend payable would have to be set up in Year 1 for the amount owed to the preferred stockholders.

- Preferred shareholders would receive $8,400 and common shareholders would receive $16,600.

- Preferred shareholders would receive $16,800 and common shareholders would receive $8,200.

- Assets would increase by $25,000 and stockholder's equity would decrease by $25,000.