Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.)1) Acquired $5000 cash from issuing common stock. 2) Borrowed $3200 from a bank. 3) Earned $4100 of revenues. 4) Incurred $2600 in expenses. 5) Paid dividends of $600. Lexington Company engaged in the following transactions during Year 2:1) Acquired an additional $1500 cash from the issue of common stock. 2) Repaid $2000 of its debt to the bank. 3) Earned revenues, $5500. 4) Incurred expenses of $3150. 5) Paid dividends of $1840. The amount of retained earnings on Lexington's balance sheet at the end of Year 1 was:
A. $1500.
B. $900.
C. $3500.
D. $4100.
Answer: B
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