Answer:
#1 36,000 preferred
#2 58,000 preferred
#3 58,000 preferred // 17,000 common
#4 50,000 preferred // 74,000 common
Explanation:
preferred stock dividends:
40,000 x $125 each x 1% = 50,000
the common stock will take whatever is left after preferred stock.
first year: $ 36,000
asthe preferred stock are cumulative, there is 14,00 dividends in arrears
second year: $ 58,000
we got the 50,00 for the current year plus the 16,000 in arrears
this amount declared is not enough, there are still 8,00 in arrears
third year: $ 75,000
there is 58,000 dividends for preferred stock
the rest goes for common stock
fourth year: $ 124,000
there is no arrears so the preferred only receive the 50,000 and the rest goes for common shares.
