Cosby Inc Has 10,000, $5, Cumulative Preferred Shares at December 31

Cosby Inc. has 10,000, $5, cumulative preferred shares at December 31, 2014. If the board of directors declares a $40,000 annual dividend in 2014,

A) the company still has to pay the preferred shareholders $50,000, regardless of what amount was declared.
B) the company will still owe the preferred shareholders $10,000 and should record a dividend payable in this amount.
C) the company will owe the preferred shareholders nothing further.
D) the $10,000 will be disclosed as dividends in arrears in the notes to the financial statements.