Ultimate Sportswear has $200,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $600,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $40,000. This dividend should be distributed as follows:

Multiple Choice

$16,000 preferred; $24,000 common.

$20,000 preferred; $20,000 common.

$10,000 preferred; $30,000 common.

$0 preferred; $40,000 common.

$21,000 preferred; $19,000 common.