Kelly, Incorporated, was issued a charter on January 15, 2009, that authorized the following capital stock: Common

Question:

Kelly, Incorporated, was issued a charter on January 15, 2009, that authorized the following capital stock:
, no-par, 103,000 shares.
Preferred stock, 9 percent, $8 per share, 4,000 shares.
The board of directors established a stated value on the no-par common stock of $10 per share.
During 2009, the following selected transactions were completed in the order given:
a. Sold and issued 20,000 shares of the no-par common stock at $16 cash per share.
b. Sold and issued 3,000 shares of preferred stock at $20 cash per share.
c. At the end of 2009, the accounts showed net income of $40,000.

Required:
1. Prepare the stockholders’ equity section of the at December 31, 2009.
2. Assume that you are a common stockholder. If Kelly needed additional capital, would you prefer to have it issue additional common stock or additional preferred stock? Explain.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...