A Corporation Reported a Balance in Retained Earnings of $16,500

Multiple Choice

A corporation reported a balance in retained earnings of $16,500 in its December 31, year 1, balance sheet. During year 1, the company incurred a net loss of $2,500, declared a cash dividend of $1,000, issued additional common shares for $5,000, and recorded a correction of prior years' error, net of tax, of $500 (credit) . The balance in retained earnings at January 1, year 1, must have been:

A) $19,500
B) $20,000
C) $20,500
D) $21,500