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

1. Acquired $6,000 cash from issuing common stock.

2. Borrowed $4,400 from a bank.

3. Earned $6,200 of revenues.

4. Incurred $4,800 in expenses.

5. Paid dividends of $800.

Lexington Company engaged in the following transactions during Year 2:

1. Acquired an additional $1,000 cash from the issue of common stock.

2. Repaid $2,600 of its debt to the bank.

3. Earned revenues, $9,000.

4. Incurred expenses of $5,500.

5. Paid dividends of $1,280.

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

$1,000.

$4,400.

($2,600).

$480.