kelly incorporated was issued a charter on january 15 2009 246115

Kelly, Incorporated, was issued a charter on January 15, 2009, that authorized the following capital stock:

Common stock, no-par, 103,000 shares.

Preferred stock, 9 percent, par value $8 per share, 4,000 shares.

The board of directors established a stated value on the no-par common stock of $10 per share.

During 2009, the following selected transactions were completed in the order given:

a. Sold and issued 20,000 shares of the no-par common stock at $16 cash per share.

b. Sold and issued 3,000 shares of preferred stock at $20 cash per share.

c. At the end of 2009, the accounts showed net income of $40,000.

Required:

1. Prepare the stockholders’ equity section of the balance sheet at December 31, 2009.

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.

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