Kelly Incorporated was issued a charter on January 15, 2017, that authorized the following share capital:
Common shares, no par value, 100,000 shares.
Preferred shares, $1.50, no par value, 5,000 shares.
During 2017, the following selected transactions occurred:
a. Sold and issued 20,000 common shares at $18 cash per share.
b. Sold and issued 3,000 preferred shares at $25 cash per share.
At the end of 2017, the company's net earnings equaled $40,000.

Required:
1. Prepare the shareholders' equity section of the statement of financial position at December 31, 2017.
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? Explain.