When Custom Masks Inc. was organized in January 1, Year 1. It immediately issued 20,000 shares of $100 par, 5% cumulative preferred stock and 80,000 shares of $15 par common stock.

Custom Masks Inc. dividend history is as follows.

Year 1, no dividend

Year 2, no dividend

Year 3, $500,000 dividend declared.

1. How much is the dividend arrearage as of Jan 1, Year 2?
2. How will the Year 3 dividend be split between preferred and common stockholders?