E$11-5($Algo$)$ Determining the Effects of the Issuance of Common and Preferred Stock $[$LO $11-2,$ LO $11-4]$

Dornbusch Associates was issued a charter on January $15$ authorizing the following capital stock:

Common stock, $$6$ par, $100,000$ shares, one vote per share.

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

The following selected transactions were completed during the first year of operations in the order given:

Issued $22,000$ shares of the $$6$ par common stock at $$20$ cash per share.

Issued $3,200$ shares of preferred stock at $$24$ cash per share.

At the end of the year, the accounts showed net income of $$40,000.$ No dividends were declared.

Required:

Prepare the stockholders$$ equity section of the balance sheet at December $31.$

Assume that you are a common stockholder of Dornbusch Associates. If the company needed additional capital, would you prefer to have it issue additional common stock or additional preferred stock?