Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividend DeclaredYear 1$0Year 2$6,000Year 3$32,000The amount of dividends paid to preferred and common shareholders in Year 2 is:
A. $4,200 preferred; $1,800 common.
B. $3,500 preferred; $2,500 common.
C. $6,000 preferred; $0 common.
D. $0 preferred; $6,000 common.
E. $3,000 preferred; $3,000 common.
Answer: C
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