With 25,000 shares of $3 cumulative preference shares (entitlement $75,000 per year) and dividends of $0, then $20,000, then $60,000 declared in years 1 to 3, how much is owed in arrears to preference shareholders at the end of year 3?

1. Annual preference entitlement = $25{,}000 \times \$3 = \$75{,}000$. 2. End of year 1: declared $0, so arrears = $75{,}000$. 3. End of year 2: needed $150{,}000$ total, paid $20{,}000$, arrears = $150{,}000 − 20{,}000 = \$130{,}000$. 4. End of year 3: needed $130{,}000 + 75{,}000 = \$205{,}000$, paid $60{,}000$, arrears = $205{,}000 − 60{,}000 = \$145{,}000$. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §6.9 "Cash Dividends Calculations", p.258_