Answer:
(D) $60,000 to preferred and $162,000 to common
Explanation:
Annual preference dividend = 10% * $300,000 = $30,000
Since dividends for the previous year were not paid, and the preference stock are cumulative, previous year dividend will need to be paid. ($30,000).
However, since no participating rule was defined, no additional dividend will be paid on preference stock.
Therefore, total payment on preference stock = current year dividend + previous year arrears = $30,000 + $30,000 = $60,000.
The balance will be paid on common stock
= $222,000 - $60,000 = $162,000
