Torino Company Has 10,000 Shares of $5 Par Value,4% Cumulative

Multiple Choice

Torino Company has 10,000 shares of $5 par value,4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding.The company paid total cash dividends of $1,000 in its first year of operation.The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

A) $1,000.
B) $2,000.
C) $3,000.
D) $4,000.
E) $0.