RiteSide Limited was issued a charter on January 15, 2017, that authorized the following shares:

Common shares: no-par value; 100,000 shares; one vote per share
Preferred shares: 7 percent; no-par value $10 per share; 5,000 shares; non-voting

During 2017, the following selected transactions were completed in the order given:

a. Issued 20,000 common shares at $18 cash per share

b. Issued 3,000 preferred shares at $22 cash per share 

At the end of 2017, the accounts showed net income of $38,000.

Required:

1. Prepare the shareholders’ equity section of the balance sheet at December 31, 2017.

2. Assume that you are a common shareholder. If RiteSide Limited needed additional capital, would you prefer to have it issue additional common shares or additional preferred shares? Explain.