Kelly Incorporated was issued a charter on January 15, 2011, that authorized the following share capital:

Common shares, no par value, 100,000 shares.

Preferred shares, \(\$ 1.50\), no par value, 5,000 shares. (Note: \(\$ 1.50\) is the dividend rate.)

During 2011, the following selected transactions occurred:

a. Issued 30,000 common shares at \(\$ 18\) cash per share.

b. Issued 2,000 preferred shares at \(\$ 25\) cash per share.

At the end of 2011, the company's profit equalled \(\$ 42,000\).

\section*{Required:}

1. Prepare the shareholders' equity section of the statement of financial position at December 31, 2011.

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