The shareholders’ equity section of Mayberry corporation, as of the end of 2012, follows.

Mayberry began operations in 2008. The 5,000 shares of preferred stock have been outstanding since 2008.

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 shareholders’ equity ……………………………………… $1,820,000

The company has paid the following total cash dividends since 2008:

2008 ….. $ 0

2009 ….. 30,000

2010 …... 80000

2011 ….. 15,000

2012 ….. 40,000

(a) Compute the dividends paid to the preferred and common shareholders for each of the years since 2008.

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

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