The stockholders’ equity section of Mayberry Corporation, as of the end of 1997, follows. Mayberry began operations in 1993. The 5,000 shares of preferred stock have been outstand¬ ing since 1993. Preferred stock (10,000 sh. authorized, 5,000 issued, cumulative, nonparticipating, $5 dividends, $10 par value) $ 50,000 Common stock (500,000 sh. authorized, 200,000 sh. issued, 50,000 held in treasury, no par value) 1,600,000 Additional paid-in capital (P/S) 140,000 Retained earnings 110,000 Less: Treasury stock 80,000 Total stockholders’ equity $1,820,000 Since 1993 the company has paid the following total cash dividends: 1993 $ 0 1994 30,000 1995 80,000 1996 15,000 1997 40,000 REQUIRED:

a. Compute the dividends paid to the preferred and common stockholders for each of the years since 1993.

b. Compute the balance of dividends in arrears as of the end of each year.

c. Should dividends in arrears be considered a liability? Why or why not?