During its first year of operation, Cade Company experienced the following events.

(1) Issued common stock for $7,000 cash. (2) Earned $5,000 of cash revenue. (3) Paid $3,000 of cash expenses. (4) Paid cash dividends amounting to $1,000.

After closing on December 31, the balance in the retained earning account would be

$2,000. $1,000. zero. $8,000.