The balance sheet of Gondor Corporation included the following shareholders' equity accounts on January 1.
Paid in capital:
Preferred Stock, 10%, 10,000 shares at $5 par	$50,000
Common Stock, 200,000 shares issued, 195,000 outstanding, at $1 par	200,000
Paid in capital excess of par preferred	100,000
Paid in capital excess of par common	3,200,000
Retained Earnings	3,576,900
Treasury Stock, at cost 5,000 shares @ $12	(60,000)
Total Shareholders' Equity	$7,066,900
The following transactions occurred during the year:
Converted 5,000 shares of the preferred stock into 20,000 shares of common stock.
Declared a 10% stock dividend on the common shares when the market value of the $1 par common shares was $9.00.
Dividends in the amount of $500,000 were declared and paid to shareholders of record.
The company earned net income in the amount of $1,250,000.
Required:
Preapre the shareholders' equity section of the balance sheet for Gondor on December 31.