Exercise 11-6A (Algo) Accounting for cumulative preferred dividends LO 11-3 When Crossett Corporation was organized in January Year 1, it immediately issued 5,200 shares of $54 par, 6 percent, cumulative preferred stock and 12,000 shares of $11 par common stock. Its earnings history is as follows: Year 1, net loss of $14,800; Year 2, net income of $64,000; Year 3, net income of $97,200. The corporation did not pay a dividend in Year 1. Required How much is the dividend arrearage as of January 1, Year 2? Assume that the board of directors declares a $45,196 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