Problems$($Mandatory Homework$)$

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When Crossett Corporation was organized in January Year $1,$ it immediately issued $5,900$ shares of $$55$ par, $6$ percent, cumulative preferred stock and $8,000$ shares of $$14$ par common stock. Its earnings history is as follows: Year $1,$ net loss of $$14,700$; Year $2,$ net income of $$55,500$; Year $3,$ net income of $$113,000.$ The corporation did not pay a dividend in Year $1.$

Required

a$.$ How much is the dividend arrearage as of January $1,$ Year $2?$

b$.$ Assume that the board of directors declares a $$48,940$ 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?

Complete this question by entering your answers in the tabs below.

Required A

Required B

Assume that the board of directors declares a $$48,940$ 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? $($Amounts to be deducted should be indicated with minus sign. Do not round your intermediate calculations.$)$

$\backslash$table$[[,$Amount,$\backslash$table$[[$Distributed to$],[$Shareholders$]]],[,$Preferred,Common$],[$Total dividend declared$],[$Year $1$ Arrearage$],[$Year $2$ Preferred dividends$],[$Available for common$],[$Distributed to common$],[$Total distribution,,,$]]$