What between preferred and common shareholders

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Problem 1: A Corporation has 10,000 shares of 7%, $50 par preferred stock outstanding and 130,000 shares of no-par common stock outstanding. Dividends in arrears are $42,500. At the end of the current year, the corporation declares a dividend of $90,000. What is the dividend allocated between preferred and common shareholders?

Option 1: The dividend is allocated $12.500 to preferred and $77.500 to common.

Option 2: The dividend is allocated $35,000 to preferred and $55,000 to common.

Option 3: The dividend is allocated $90,000 to preferred and $0 to common.

Option 4: The dividend is allocated $77,500 to preferred and $12,500 to common.

Reference no: EM132762517

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