Question: Early in 2008, Septa, Inc., was organized with authorization to issue 1,000 shares of $100 par value preferred stock and 200,000 shares of $1 par value common stock. Five hundred shares of the preferred stock were issued at par, and 80,000 shares of common stock were sold at $15 per share. The preferred stock pays a 10 percent cumulative dividend.

During the first four years of operations (2008 through 2011), the corporation earned a total of $1,800,000 and paid dividends of 40 cents per share in each year on its outstanding common stock.