When Crossett Corporation was organized in January Year 1, it immediately issued 4,300 shares of $51 par, 7 percent, cumulative preferred stock and 8,500 shares of $7 par common stock. Its earnings history is as follows: Year 1, net loss of $15,800; Year 2, net income of $121,000; Year 3, net income of $86,100. 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 $48,202 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? (Amounts to be deducted should be indicated with minus sign.) Distributed to Shareholders

Amount. Preferred CommonTotal

dividend declared. _______ _______ ___________

Year 1 Arrearage _______. _______. _______

Year 2 Preferred dividends _______. _______. _______

Available for common. _______. _______. _______

Distributed to common _______. _______. _______

Total distribution _______. _______. ______