The Squash Company's shareholders' equity on January 1, 2018 was $3,125,500. During 2018, Squash Company reported the following: Net income of $575,325. Declared cash dividends totaling $125,000; the dividends had not been paid as of December 31, 2018. Issued 10,000 shares of $5 par value common stock at $9 per share. Purchased 5,000 shares of its common stock for $9.75 per share; the shares are being held as treasury shares. Sold 1,500 shares of treasury stock for $9.25 per share. Issued 2,000 shares of $5 par value common stock resulting from the declaration of a stock dividend during 2018; the market value of the common stock on the date of declaration was $10.25 per share.

What was shareholders' equity as of December 31, 2018? (Show your computations in order to get partial credit in case your answer is incorrect)