Highland Industries issues 30,000 shares of 4%, $25 par value preferred stock at the beginning of 2011. All remaining shares are common stock. Highland was not able to pay dividends in 2011, but plans to pay dividends of $85,000 in 2012. Assuming the preferred stock is noncumulative, how much of the $85,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2012?

$42,500 to preferred stockholders and $42,500 to common stockholders.

$85,000 to preferred stockholders and $0 to common stockholders.

$60,000 to preferred stockholders and $25,000 to common stockholders.

$30,000 to preferred stockholders and $55,000 to common stockholders.

Highland Industries issues 10,000 shares of 5%, $50 par value preferred stock at the beginning of 2011. All remaining shares are common stock. Highland was not able to pay dividends in 2011, but plans to pay dividends of $60,000 in 2012. Assuming the preferred stock is cumulative, how much of the $60,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2012?

$50,000 to preferred stockholders and $10,000 to common stockholders.

$25,000 to preferred stockholders and $35,000 to common stockholders.

$30,000 to preferred stockholders and $30,000 to common stockholders.

$60,000 to preferred stockholders and $0 to common stockholders.