The Retained Earnings of Honesty Corporation as at January 1, 2018 shows a credit balance of P 400,000. During the year, it was discovered that the depreciation of one unit of machinery is overstated by P 200,000 in 2016. Also during the year, cash dividends of P 1.00 per share were paid to shareholders with 1,000,000 outstanding shares. In addition, due to approval by the Board of Directors through a Board Resolution, the Retained Earnings Ledger account shows a credit entry of P 300,000 about change from FIFO to weighted average in costing inventories. The following retained earnings appropriation are presented to you:

- Appropriated for treasury shares, P 600,000, in which the original balance is P 1,000,000 and then reduced by P 400,000 because of treasury shares reissuance during the year.

- Appropriated for contingencies, P 1,600,000, in which the original balance is P 1,400,000 and then increased by P 200,000 because of current appropriation during the year. The statement of comprehensive income during 2018 is presented below: Net Sales P 20,000,000 Cost of Goods Sold (12,000,000) Gross Profit P 8,000,0000 Operating Expenses (4,285,000) Profit before income tax P 3,715,000 Provision for income tax (1,115,000) Profit after tax P 2,600,000

What is the corrected retained earnings balance as at January 1, 2018?