Sanchez Company engaged in the following transactions during 2015:

1) Started the business by issuing $42,000 of common stock for cash.

2) The company paid cash to purchase $26,400 of inventory.

3) The company sold inventory that cost $16,000 for $30,600 cash.

4) Operating expenses incurred and paid during the year, $14,000.

Sanchez Company engaged in the following transactions during 2016:

1) The company paid cash to purchase $35,200 of inventory.

2) The company sold inventory that cost $32,800 for $57,000 cash.

3) Operating expenses incurred and paid during the year, $18,000.

Note: Sanchez uses the perpetual inventory system. 

The amount of retained earnings at December 31, 2016 is:

A$6,200.

B$26,000.

C$6,800.

D$38,800.