Answer:
a. The dividend arrearage as of January 1,2019 is $12,000
b. $24,000 will be dividend Preferred and $16,000 will be common
Explanation:
a. In order to calculate how much is the dividend arrearage as of January 1,2019, we would have to make the following calculation:
dividend arrearage as of January 1,2019=$4,000* $50 * 6% = $12,000
b. The dividend will be divided between the preferred and common stockholders as follows:
Distribution to shareholders
Amount Preferred Common
Total Dividend Declared $40,000
2018 Arrearage -$12,000 $12,000 $0
2019 preferred dividends -$12,000 $12,000 $0
Available for Common $16,000
Distributed to Common -$16,000 $0 $16,000
Total Distribution $24,000 $16,000