Windswept Power Corporation issued 150,000, $4.50 cumulative preferred shares to fund its first investment in wind generators. In its first year of operations, it paid $450,000 of dividends to its preferred shareholders. In its second year, the company paid dividends of $900,000 to its preferred shareholders. Determine dividends in arrears. Instructions

a. What is the total annual preferred dividend supposed to be for the preferred shareholders?

b. Calculate any dividends in arrears in years 1 and 2.

c. Explain how dividends in arrears should be reported in the financial statements.

d. If the preferred shares were noncumulative rather than cumulative, what dividend would the company likely have paid its preferred shareholders in year 2?