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

1. 1) Acquired $5,000 cash from issuing common stock.
2. 2) Borrowed $3,200 from a bank.
3. 3) Earned $4,100 of revenues.
4. 4) Incurred $2,600 in expenses.
5. 5) Paid dividends of $600.

Lexington Company engaged in the following transactions during Year 2:

1. 1) Acquired an additional $1,500 cash from the issue of common stock.
2. 2) Repaid $2,000 of its debt to the bank.
3. 3) Earned revenues, $5,500.
4. 4) Incurred expenses of $3,150.
5. 5) Paid dividends of $1,840.

Total liabilities on Lexington's balance sheet at the end of Year 1 equal:

Multiple Choice

• $1,240.

• $3,200.

• ($2,000).

• $1,500.