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

Common shares, no par value, 210,000 shares. Preferred shares, $1.60, no par value, 5,500 shares. (Note: $1.60 is the dividend rate.)

During the year, the following selected transactions occurred: a. Sold and issued 37,000 common shares at $23 cash per share.

b. Sold and issued 4,700 preferred shares at $23 cash per share. At the end of the year, the companys net earnings equalled $70,000. Required: 1. Prepare the shareholders equity section of the statement of financial position at the end of the year.

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?

\begin{tabular}{|l|l|} \hline \multicolumn{2}{c|}{ KELLY INCORPORATED } \\ \hline \multicolumn{2}{c|}{ Shareholders' Equity } \\ \hline \multicolumn{2}{|c|}{ As at End of Year } \\ \hline Share capital: & \\ \hline Total share capital & \\ \hline & $ \\ \hline Total shareholders' equity & 0 \\ \hline \end{tabular}