Magic Corp.has 20,000 shares of noncumulative,$5 preferred shares outstanding as well as 100,000 common shares.The board of directors have declared and distributed the required dividends for the past three years,not counting the current year.The board wants to give the common shareholders a $2.50 dividend per share for the current year.The total dividends to be declared must be:

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The preferred shareholders must receive their $5 per share dividend first, totaling $100,000 (20,000 shares x $5). Then, the common shareholders can receive their $2.50 per share dividend, totaling $250,000 (100,000 shares x $2.50). Therefore, the total dividends to be declared must be $350,000 ($100,000 + $250,000).