When Crossett Corporation was organized in January Year 1, it immediately issued 4,500 shares of $53 par, 8 percent, cumulative preferred stock and 10,000 shares of $13 par common stock. Its earnings history is as follows: Year 1, net loss of $14,900; Year 2, net income of $61,900; Year 3, net income of $97,500. The corporation did not pay a dividend in Year 1.
Required
a. How much is the dividend arrearage as of January 1, Year 2?