Grimes & Dotson Ltd. did not pay dividends on its 4.5%, $100 par value cumulative preferred stock during 2018 or 2019. Since 2016, 70,000 shares of this stock have been outstanding. Grimes & Dotson Ltd. has been profitable in 2020 and is considering a cash dividend on its common stock that would be payable in December 2020. The amount of dividends that would have to be paid on the preferred stock before a cash dividend could be paid to the common stockholders is:
A. $210,000.
B. $945,000.
C. $315,000.
D. $1,575,000.
Answer: B
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