Problem

Cash dividends: common and preferred stockVarsity Corp. had the following stock issued and...

Cash dividends: common and preferred stock

Varsity Corp. had the following stock issued and outstanding at January 1, 2012.

1.200,000 shares of no-par common stock.

2.10,000 shares of $100 par, 8 percent, cumulative preferred stock. (Dividends are in arrears for one year, 2011.)

On February 1, 2012, Varsity declared a $200,000 cash dividend to be paid March 31 to shareholders of record on March 10.

Required

What amount of dividends will be paid to the preferred shareholders versus the common shareholders?

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