Ultimate Sportswear has $260,000 of 9% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $660,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $46,000. This dividend should be distributed as follows:
A. $23,400 preferred; $22,600 common.
B. $11,500 preferred; $34,500 common.
C. $24,000 preferred; $22,000 common.
D. $23,000 preferred; $23,000 common.
E. $0 preferred; $46,000 common.
Answer: A
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