On December 31, 2020, Loving Company showed shareholder’s equity of P5,000,000. The share capital of P3,000,000 remained unchanged during the year. The transactions which affected the equity were: An...

On December 31, 2020, Loving Company showed shareholder’s equity of
P5,000,000. The share capital of P3,000,000 remained unchanged during
the year. The transactions which affected the equity were: An adjustment
of retained earnings, beg. for under depreciation: P200,000; gain on sale
of treasury shares: P300,000; cash dividends declared: P400,000; net
income for the current year: P800,000. What is the retained earnings
balance on January 1, 2020?

A. 1,400,000
B. 1,500,000
C. 1,700,000
D. answer not given