On December 31, 2020, the balance sheet of Legend Corporation shows a total equity of P1,260,000. During 2020, the shareholders' equity was affected by: Adjustment to retained earnings for the...

On December 31, 2020, the balance sheet of Legend Corporation shows a total equity of P1,260,000. During 2020, the shareholders' equity was affected by:

Adjustment to retained earnings for the overstatement of 2019 net income: P17,500

Cash dividend declared and paid in 2020: 10%

Net income of 2020: P65,000

The share capital of P1,000,000 remained unchanged during the year.

What is the balance of retained earnings on January 1, 2020?

a. P295,000

b. P360,000

c. P260,000

d. P312,500