Madison Co.paid dividends of $3,000; $6,000; and $10,000 during 2010,2011 and 2012 respectively.The company had 500 shares of preferred stock outstanding with a $10 per share cumulative dividend.The amount of dividends received by the common shareholders during 2012 would be:

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The preferred shareholders are entitled to $5,000 annually (500 shares x $10). In 2010, they received $3,000, leaving $2,000 in arrears. In 2011, they received $6,000, covering the $5,000 for 2011 and $1,000 of the arrears. In 2012, they receive $5,000 for that year and the remaining $1,000 arrears, totaling $6,000. The remaining $4,000 of the $10,000 dividend goes to common shareholders.