M-ary Corporation has 10,000 shares of $10 par, cumulative, 6% preferred stock and 10,000 shares of common stock outstanding since being organized at the beginning of 2019. It declared its first dividend of $40,000 at the end of 2021. This means that the dividend per share for each preferred share is $6. Mary Corporation has cumulative preferred stock, so any missed dividends will accumulate and must be paid in the future.What is Cumulative Preferred Stock?Cumulative preferred stock refers to preferred stock whose dividends accumulate if the company cannot pay them in the current year. If a company is unable to pay dividends in a given year, it can add them to future dividends. In other words, cumulative preferred shares provide shareholders with the right to unpaid dividends in the event that the company misses a dividend payment. These dividends must be paid before dividends are paid to holders of common shares.What is Par Value?Par value refers to the nominal value of a security that appears on the face of the security. Par value is a set value assigned by a company when shares are issued, indicating the minimum value per share. The stated or face value of a security is the same as the par value of a security in general.What is a Common Stock?Common stock refers to a class of securities that represents ownership in a corporation. Common stockholders have the right to vote on issues such as the election of board members and other critical decisions concerning the company. The right to dividend income is typically the last to be exercised by common stockholders. Common stockholders are entitled to a share of the company's profits, but they are not guaranteed any dividend income, unlike preferred stockholders.