La Paz Company Engaged in the Following Transactions During 2012

Multiple Choice

La Paz Company engaged in the following transactions during 2012, its first year in operation: (Assume all transactions are cash transactions)
1) Acquired $3,000 cash from issuing common stock.
2) Borrowed $2,200 from a bank.
3) Earned $3,100 of revenues.
4) Incurred $2,400 in expenses.
5) Paid dividends of $400.
La Paz Company engaged in the following transactions during 2013:
1) Acquired an additional $500 cash from the issue of common stock.
2) Repaid $1,300 of its debt to the bank.
3) Earned revenues, $4,500.
4) Incurred expenses of $2,750.
5) Paid dividends of $640.
The amount of retained earnings on La Paz's 2012 balance sheet was

A) $3,100.
B) $2,700.
C) $300.
D) $700.