Problem

Shareholders' Equity

Herrera Manufacturing Corporation completed the following transactions during its first year of operation, 2016:

The state authorized the issuance of 30,000 shares of $5 par common stock; 15,000 shares were issued at $22 per share.

The state authorized the issuance of 6,000 shares of $50 par preferred stock. All 6,000 shares were issued at $70 per share.

Herrera reacquired 1,000 shares of its outstanding common stock at $18 per share. The cost method is used to account for treasury stock.

Herrera invested $50,000 of excess cash, not needed to finance operations, in long-term available-for-sale equity securities. At year-end, the market value of these securities was $47,500.

Herrera sold 500 shares of treasury stock for $23 per share.

Net income for the first year of operations was $16,000. No dividends were declared.

Required:

Prepare the shareholders' equity section of Herrera's balance sheet as of December 31, 2016.