Exercise 8-8A (Algo) Accounting for cumulative preferred dividends LO 8-3 When Crossett Corporation was organized in January, Year 1, it immediately issued 4,300 shares of $51 par, 5 percent, cumulative preferred stock and 11,500 shares of $12 par common stock. lis earnings history is as follows: Year 1, net loss of $13,000; Year 2 , net income of \$120,000: Year 3, net income of $208,000. The corporation did not pay a dividend in Year 1 . Required a. How much is the dividend arrearage as of January 1, Year 2? b. Assume that the board of directors deciares a $53,500 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? How much is the dividend arrearage as