The company has 10,000 shares of 6%, $100 par preferred stock outstanding. In addition, the company has 100,000 shares of common stock outstanding. The company started business on January 1 of Year 1. Total cash dividends paid during Year 1 and Year 2 were $45,000 and $100,000, respectively. Compute the total dividends paid to PREFERRED shareholders in both years assuming that the preferred stock is CUMULATIVE.

• Year 1 = $45,000; Year 2 = $75,000
• Year 1 = $45,000; Year 2 = $45,000
• Year 1 = $45,000; Year 2 = $40,000
• Year 1 = $60,000; Year 2 = $60,000