Calculating dividends

[jmafte]

I'm curious how it is decided when dividends are distributed between preferred and common stocks. I understand the calculations on how to find price per share and what not, but this is the example we were given in class, and I'm just not sure how you decided when things go into arrears or get paid out and when common stock gets:

Lemonds Corp. has declared the following annual dividends over a six-year period: 2008, $40,000; 2009, $18,000; 2010, $24,000; 2011, $27,000; 2012, $65,000 and 2013, $54,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative, non-participating 6% preferred stock, $20 Par; and 40,000 shares of Common Stock $1 Par.


Preferred Stock Common Stock

Year Dividends Total Per Share Arrears Total Per Share

2008 $40,000 $30,000 $1.20 0 $10,000 $0.25
2009 18,000 18,000 .72 12,000 0 0
2010 24,000 24,000 .96 18,000 0 0
2011 27,000 27,000 1.08 21,000 0 0
2012 65,000 51,000 2.04 0 14,000 .35
2013 54,000 30,000 1.20 0 24,000 .60


Arrears dividend, preferred
(2009: $12,000; 2010: $6,000; 2011: $3,000) $21,000
Current dividend, preferred 30,000
Total $51,000


Once again, I understand the calculations, but I guess I'm not grasping the concept behind what makes the dividends payable to which stock and when.