
Reporting
• LO18–4, LO18–7
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2018 annual report:
Note 5. Convertible Preferred Stock (in part):
The Company has the following Convertible Preferred Stock outstanding as of September 2018:
Date of issuance: | June 17, 2015 |
Optionally redeemable beginning: | June 18, 2017 |
Par value (gross proceeds): | $2,500,000 |
Number of shares: | 100,000 |
Liquidation preference per share: | $25.00 |
Conversion price per share: | $30.31 |
Number of common shares in which to be converted: | 82,481 |
6.785% |
The Preferred Stock is convertible at any time by the holders into a number of shares of Ozark’s common stock equal to the number of preferred shares being converted times a fraction equal to $25.00 divided by the conversion price. The conversion prices for the Preferred Stock are subject to customary adjustments in the event of stock splits, stock dividends and certain other distributions on the Common Stock. Cumulative dividends for the Preferred Stock are payable in arrears, when, as, and if declared by the Board of Directors, on March 31, June 30, September 30, and December 31 of each year.
The Preferred Stock is optionally redeemable by the Company beginning on various dates, as listed above, at redemption prices equal to 112% of the liquidation preference. The redemption prices decrease 1% annually thereafter until the redemption price equals the liquidation preference, 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 preferred stock?
2. If dividends are not paid in 2019 and 2020, but are paid in 2021, what amount of dividends will the shareholder 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. If Ozark chooses to redeem the shares on June 18, 2019, what amount will the investor be paid for his/her 100 shares?

Trending nowThis is a popular solution!

Chapter 18 Solutions
Loose Leaf Intermediate Accounting
- I mistakenly submitted blurr image please comment i will write values. please dont Solve with incorrect values otherwise unhelpful.no aiarrow_forward1) Identify whethere the company is paying out dividends based on the attached statement. 2) Describe in detail how that the company’s dividend payouts have changed over the past five years. 3)Describe in detail the changes in “total equity” (representing the current “book value” of the company).arrow_forwardWhich is not an objective of internal controls?A. Safeguard assetsB. Improve profitsC. Ensure accurate recordsD. Promote operational efficiencyneed helparrow_forward
- Which is not an objective of internal controls?A. Safeguard assetsB. Improve profitsC. Ensure accurate recordsD. Promote operational efficiencyno aiarrow_forwardCan you solve this general accounting problem using appropriate accounting principles?arrow_forwardWhich is not an objective of internal controls?A. Safeguard assetsB. Improve profitsC. Ensure accurate recordsD. Promote operational efficiency no aiarrow_forward
- Need Answer with general Accounting Solving Methodarrow_forwardPlease provide the correct answer to this financial accounting problem using valid calculations.arrow_forward20 Nelson and Murdock, a law firm, sells $8,000,000 of four-year, 8% bonds priced to yield 6.6%. The bonds are dated January 1, 2026, but due to some regulatory hurdles are not issued until March 1, 2026. Interest is payable on January 1 and July 1 each year. The bonds sell for $8,388,175 plus accrued interest. In mid-June, Nelson and Murdock earns an unusually large fee of $11,000,000 for one of its cases. They use part of the proceeds to buy back the bonds in the open market on July 1, 2026 after the interest payment has been made. Nelson and Murdock pays a total of $8,456,234 to reacquire the bonds and retires them. Required1. The issuance of the bonds—assume that Nelson and Murdock has adopted a policy of crediting interest expense for the accrued interest on the date of sale.2. Payment of interest and related amortization on July 1, 2026.3. Reacquisition and retirement of the bonds.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
