After reviewing the statement of financial position, you notice that there are preferred shares valued at $100,000, whic

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After reviewing the statement of financial position, you notice
that there are preferred shares valued at $100,000, which equals
1000 shares outstanding. The preferred shares are redeemable and
have a 5% annual dividend. The dividend will double every 3 years
to a maximum 20% dividend yield. The preferred shares become
convertible into common shares if the business does not pay the
specified dividend on the preferred shares.
First the D/E ratio is wrong and equity is overstated in each
year.
Please assist in why it was overstated, and provide calculations
for the journal entries for the dividends, how it would impact
retained earnings and recalculations of the D/E.