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Xtreme Sports has $200,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Xtreme Sports also has $600,000 of common stock outstanding. In the company's first year

Xtreme Sports has $200,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Xtreme Sports also has $600,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, Xtreme Sports paid cash dividends of $40,000. This dividend should be distributed as follows:

$20,000 preferred; $20,000 common.
$21,000 preferred; $19,000 common.
$0 preferred; $40,000 common.
$16,000 preferred; $24,000 common.
$10,000 preferred; $30,000 common.

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