When Crossett Corporation was organized in January, Year $1,$ it immediately issued $4,200$ shares of $$51$ par, $7$ percent, cumulative preferred stock and $10,500$ shares of $$11$ par common stock. Its earnings history is as follows: Year $1,$ net loss of $$14,000$; Year $2,$ net income of $$121,000$; Year $3,$ net income of $$212,000.$ 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 $$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?

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How much is the dividend arrearage as of January $1,$ Year $2?$

Dividend arrearage

When Crossett Corporation was organized in January, Year $1,$ it immediately issued $4,200$ shares of $$51$ par, $7$ percent, cumulative preferred stock and $10,500$ shares of $$11$ par common stock. Its earnings history is as follows: Year $1,$ net loss of $$14,000$; Year $2,$ n income of $$121,000$; Year $3,$ net income of $$212,000.$ 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 $$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?

Complete this question by entering your answers in the tabs below.

Required A

Required $B$

Assume that the board of directors declares 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?

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