Reference no: EM132713093

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

Common shares, no par value, 230,000 shares.

Preferred shares, $1.40, no par value, 6,300 shares. (Note: $1.40 is the dividend rate.)

During the year, the following selected transactions occurred:

Sold and issued 33,000 common shares at $19 cash per share.
Sold and issued 4,300 preferred shares at $27 cash per share.

At the end of the year, the company's net earnings equalled $53,000.

Required:

Problem 1. Prepare the shareholders' equity section of the statement of financial position at the end of the year.

Problem 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?