Nguyen Corporation was organized in January 2012 by 10 shareholders to operate an airconditioning sales and service business. The charter issued by the government authorized the following no par value shares:

Common shares, 200,000 shares.

Preferred shares, 50,000 shares.

During January and February 2012, the following transactions were completed:

a. Collected \(\$ 60,000\) cash from each of the 10 organizers and issued 3,000 common shares to each of them.

b. Issued 8,000 preferred shares at \(\$ 25\) per share; collected the cash.

c. Issued 500 common shares to a new investor at \(\$ 25\) per share; collected the cash.
The company's operations resulted in profit of \(\$ 40,000\) for 2012. The board of directors declared cash dividends of \(\$ 25,000\) that were paid in December 2012. The preferred shares have a dividend rate of \(\$ 1\) per share.
\section*{Required:}
1. Prepare the shareholders' equity section of the statement of financial position at December 31 , 2012.
2. Why would an investor prefer to buy a preferred share rather than a common share?
3. Is it ethical to sell shares to outsiders at a higher price than the amount paid by the organizers?