When Crossett Corporation was organized in January Year 1, it immediately issued 5,900 shares of $55 par, 6 percent, cumulative preferred stock and 11,000 shares of $10 par common stock. Its earnings history is as follows: Year 1, net loss of $15,300; Year 2, net income of $61,200; Year 3, net income of $107,100. The corporation did not pay a dividend in Year 1. Required

1. How much is the dividend arrearage as of January 1, Year 2?
2. Assume that the board of directors declares a $55,940 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?