• Kamili Company started business on January 1 of Year 1. For Year 1, Kamili reported net income of $100,000 and paid cash dividends of $35,000. The following occurred during Year 2: Purchased 10,000 shares of treasury stock for $20 per share
• Reissued 3,000 shares of the treasury stock for $25 per share
• Reissued 6,500 more shares of the treasury stock for $8 per share
• Discovered an error in the Year 1 books. In Year 1, Kamili Company overstated its sales revenue by $23,000.
• Discovered another error in the Year 1 books. In Year 1, Kamili Company overstated its depreciation expense by $7,500.
• Net income for Year 2 was $80,000.

Note: The Year 2 net income of $80,000 has been computed correctly except that NO consideration has been given to the impact of the treasury stock transactions on net income for Year 2.

• Cash dividends paid during Year 2 were $45,000.

What is the correct Retained Earnings balance at the end of Year 2?

a) positive (credit) $73,500.

b) positive (credit) $18,500.

c) positive (credit) $90,000.

d) positive (credit) $21,500.

e) positive (credit) $58,500.