Kelly, Incorporated, was issued a charter on January 15. 2003, that authorized the following capital stock:

Common stock, no-par, 100,000 shares.

Preferred stock, 7 percent, par value $10 per share. 5,000 shares.

The board of directors established a stated value on the no-par common stock of S6 per share. During 2003, the following selected transactions were completed in the order given:

a. Sold and issued 20.000 shares of the no-par common stock at $18 cash per share.

b. Sold and issued 3.000 shares of preferred stock at $22 cash per share.

c. At the end of 2003. the accounts showed net income of $38,000.

Required: 1. Prepare the stockholders' equity section of the balance sheet at December 31. 2003. 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.