Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par common stock.
The preferred stock is cumulative. How much will be distributed to the preferred and common stockholders on the date of payment if the preferred stock is $12,000 in arrears?
A. $18,000 preferred; $22,000 common
B. $20,000 preferred; $20,000 common
C. $40,000 preferred; $0 common
D. $6,000 preferred; $34,000 common