Cepeda Company manufactures backpacks. During 2014, Cepeda issued bonds at 10% interest and used the cash proceeds to purchase treasury stock. The following financial information is available for Cepeda Company for the years 2014 and 2013.

Sales revenue (13'/14') $9,000,000$9,000,000Net income2,240,0002,500,000Interest expense500,000140,000Tax expense670,000750,000Dividends paid on common stock890,0001,026,000Dividends paid on preferred stock300,000300,000Total assets (year-end)14,500,00016,875,000Average total assets15,687,50017,763,000Total liabilities (year-end)6,000,0003,000,000Avg. total common stockholders