Problem: Module 3 Textbook Problem 14 Learning Objective: 3-11 Differentiate between common and preferred stock When Crossett Corporation was organized in January, Year 1, it immediately issued 4,000 shares of $46 par, 8 percent, cumulative preferred stock and 8,500 shares of $7 par common stock. Its earnings history is as follows: Year 1, net loss of $17,000; Year 2, net income of $122,000; Year 3, net income of $219,000. 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 declares a $52,500 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? Complete this question by entering your answers in the tabs below. Required A Required B Assume that the board of directors declares a $52,500 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? Amount Distributed to Shareholders Preferred Common Total dividend declared Year 1 Arrearage Year 2 Preferred dividends Available for common Distributed to common Total distribution