When Crossett Corporation was organized in January Year 1, it immediately issued 4,200 shares of $53 par, 6 percent, cumulative preferred stock and 9,500 shares of $14 par common stock. Its earnings history is as follows: Year 1, net loss of $15,500; Year 2, net income of $59,400; Year 3, net income of $89,800. 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 $41,212 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?