When Crossett Corporation was organized in January, Year 1, it immediately issued 4,000 shares of $50 par, 6 percent, cumulative preferred stock and 50,000 shares of $20 par common stock. Its earnings history is as follows: Year 1, net loss of $35,000; Year 2, net income of $125,000; Year 3, net income of $215,000. 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 $40,000 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? Answer is not complete. Complete this question by entering your answers in the tabs below. Required a Required B Assume that the board of directors declares a $40,000 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? Distribution to Shareholders Amount Preferred Common Total dividend declared $ 25,000 Year 1 Arrearage (12,000) $ 12,000 0 Year 2 Preferred dividends (12,000) 12,000 Available for common Distributed to common 1,000 0 1,000 X Total distribution $ 24,000 $ 1,000 $