Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the OzarkMountain regions. The following disclosure note appeared in the company's 2018 annual report:E 18-8Reportingpreferred shares• LO18-4, LO18–7Note 5. Convertible Preferred Stock (in part):The Company has the following Convertible Preferred Stock outstanding as of September 2018:Date of issuance:June 17, 2015Optionally redeemable beginning:Par value (gross proceeds):Number of shares:June 18, 2017$2,500,000Liquidation preference per share:Conversion price per share:Number of common shares in which to be100,000$25.00$30.31converted:82,481Dividendrate:6.785%The Preferred Stock is convertible at any time by the holders into a number of shares of Ozark'scommon stock equal to the number of preferred shares being converted times a fraction equalto $25.00 divided by the conversion price. The conversion prices for the Preferred Stock aresubject to customary adjustments in the event of stock splits, stock dividends and certain otherdistributions on the Common Stock. Cumulative dividends for the Preferred Stock are payable inarrears, when, as, and if declared by the Board of Directors, on March 31, June 30, September30, and December 31 of each year.The Preferred Stock is optionally redeemable by the Company beginning on various dates, aslisted above, at redemption prices equal to 112% of the liquidation preference. The redemptionprices decrease 1% annually thereafter until the redemption price equals the liquidationpreference, after which date it remains the liquidation preference.Required:1. What amount of dividends is paid annually to a preferred shareholder owning 100 shares of the Series A pre-ferred stock?2. If dividends are not paid in 2019 and 2020, but are paid in 2021, what amount of dividends will the share-holder receive?3. If the investor chooses to convert the shares in 2019, how many shares of common stock will the investorreceive for his/her 100 shares?4. If Ozark chooses to redeem the shares on June 18, 2019, what amount will the investor be paid for his/her100 shares?

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Required: 1. What amount of dividends is paid annually to a preferred sharcholder owning 100 shares of the Series A pre- ferred stock? 2. If dividends are not paid in 2019 and 2020, but are paid in 2021, what amount of dividends will the share- holder receive? 3. If the investor chooses to convert the shares in 2019, how many shares of common stock will the investor receive for his/her 100 shares? 4. IfOzark chooses to redeem the shares on June 18, 2019, what amount will the investor be paid for hisher 100 shares?

Required: 1. What amount of dividends is paid annually to a preferred sharcholder owning 100 shares of the Series A pre- ferred stock? 2. If dividends are not paid in 2019 and 2020, but are paid in 2021, what amount of dividends will the share- holder receive? 3. If the investor chooses to convert the shares in 2019, how many shares of common stock will the investor receive for his/her 100 shares? 4. IfOzark chooses to redeem the shares on June 18, 2019, what amount will the investor be paid for hisher 100 shares?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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