At December 31, 2012, Gem Garments Inc

At December 31, 2012, Gem Garments Inc. has 10,000, $5, cumulative preferred shares issued. If the board of directors declares a $40,000 dividend at this date

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