The Chester Company has issued 10%, nonparticipating, cumulative preferred stock with a total par value of $400,000 and common stock with a total par value of $800,000. No dividends are in arrears. How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $180,000 are distributed?
A) $80,000 to preferred and $100,000 to common
B) $60,000 to preferred and $120,000 to common
C) $55,000 to preferred and $125,000 to common
D) $40,000 to preferred and $140,000 to common
D
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