Spike & Jones Ltd. did not pay dividends on its 7.5%, $100 par value cumulative preferred stock during 2012 or 2013. Since 2006, 125,000 shares of this stock have been outstanding. Spike & Jones Ltd. has been profitable in 2014 and is considering a cash dividend on its common stock that would be payable in December 2014.
Required:
Calculate the amount of dividends that would have to be paid on the preferred stock before a cash dividend could be paid to the common stockholders.