Exercise 11-6A (Algo) Accounting for cumulative preferred dividends LO 11-3 When Crossett Corporation was organized in January, Year 1, it immediately issued 5,500 shares of $53 par, 5 percent, cumulative preferred stock and 10,000 shares of $11 par common stock. Its earnings history is as follows: Year 1, net loss of $13,500; Year 2, net ncome of $113,000; Year 3, net income of $114,700. The corporation did not pay a dividend in Year 1. Required a. How much is the dividend arrearage as of January 1, Year 2? Dividend arrearage b. Assume that the board of directors declares a $40,150 cash dividend at the end of Year 2 (remember that the Year 1 and Year 2 preferred dividends are due). How will the dividend be divided between the preferred and common stockholders? Total amount distributed to preferred shares Total amount distributed to common shares $ 24,000