Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $3,400 cash from issuing common stock. 2) Borrowed $2,400 from a bank. 3) Earned $3,300 of revenues. 4) Incurred $2,440 in expenses. 5) Paid dividends of $440. Lexington Company engaged in the following transactions during Year 2: 1) Acquired an additional $700 cash from the issue of common stock. 2) Repaid $1.440 of its debt to the bank. 3) Earned revenues, $4,700. 4) Incurred expenses of $2,830. 5) Paid dividends of $880. The amount of retained earnings on Lexington's balance sheet at the end of Year 1 was: $420. $3,300 $2.860. $860