Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions

E 18-8 Reporting preferred shares

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 2011 annual report:

Note 5. CONVERTIBLE PREFERRED STOCK (in part):
The Company has the following Convertible Preferred Stock outstanding as of September 2011:
Date of issuance: June 17, 2008
Optionally redeemable beginning June 18, 2010
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
Dividend rate: 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 2012 and 2013, but are paid in 2014, what amount of dividends will the shareholder receive?
3. If the investor chooses to convert the shares in 2012, 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, 2012, what amount will the investor be paid for his/her 100 shares?

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Use the assets and partners’ bases from Problem 28. Assume the partnership distributes all its assets in a liquidating distribution

Use the assets and partners’ bases from Problem 28. Assume the partnership distributes all its assets in a liquidating distribution. In deciding the allocation of assets, what issues should the partnership consider to minimize each partner’s taxable gains?

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4-27 (Assigning marketing, distribution, and selling expenses to customers) Tetra Company’s cost system assigns marketing, distribution, and selling expenses to customers using a rate of 33% of sales revenue

4-27 (Assigning marketing, distribution, and selling expenses to customers) Tetra Company’s cost system assigns marketing, distribution, and selling expenses to customers using a rate of 33% of sales revenue. The new controller has discovered that Tetra’s customers differ greatly in their ordering patters and interaction with Tetra’s sales force. Because the controller believes Tetra’s cost system does not accurately assign marketing, distribution, and selling expenses to customers, she developed an activity-based costing system to assign these expenses to customers. She then identified the following marketing, distribution, and selling costs for two customers, Ashton and Brown: ASHTON BROWN Sales representative $9,000 $42,000 Service customers 15,000 110,000 Handle customer orders 1,000 12,000 Ship to customers 24,000 72,000 The following additional information is available: ASHTON BROWN Sales $430,000 $350,000 Cost of goods sold 220,000 155,000 a. Using the current cost system’s approach of assigning marketing, distribution, and selling expenses to customers using a rate of 33% of sales revenue, determines the operating profit associated with Ashton and with Brown. b. Using the activity-based costing information provided, determine the operating profit associated with Ashton and with Brown. c. Which of the two methods produced more accurate assignments of marketing, distribution, and selling expenses to customers? Explain.

Click here for the solution: 4-27 (Assigning marketing, distribution, and selling expenses to customers) Tetra Company’s cost system assigns marketing, distribution, and selling expenses to customers using a rate of 33% of sales revenue