Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.)

1. Acquired $4,900 cash from issuing common stock.
2. Borrowed $3,150 from a bank.
3. Earned $4,050 of revenues.
4. Incurred $2,590 in expenses.
5. Paid dividends of $590.

Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.)

1. Acquired an additional $1,450 cash from the issue of common stock.
2. Repaid $1,965 of its debt to the bank.
3. Earned revenues, $5,450.
4. Incurred expenses of $3,130.
5. Paid dividends of $1,780.

What was the amount of liabilities on Lexington's balance sheet at the end of Year 2?

Multiple Choice

• $1,190.

• $1,450.

• ($1,965).

• $1,185.