Retained Earnings Formula Steps:

• Start with beginning retained earnings of $5,000.
• Add profit for the year of $3,000.
• Dividends paid ($700) relate to prior-year declaration, so no subtraction this year.
• Proposed dividends ($300) are not yet declared, so no subtraction this year.
• Result: $5,000 +$3,000 = $8,000.

Why C is correct:

• Per accounting standards (e.g., IAS 1), ending retained earnings equals beginning balance plus net income minus dividends declared in the current period; here, neither paid nor proposed counts as current declaration.

Why the others are wrong:

• A. $5000: Equals beginning balance only, omitting addition of current profit.
• B. $7000: Incorrectly adds beginning balance to dividends paid, ignoring profit.
• D. $10000: Overstates by adding extraneous amounts like total dividends to beginning plus profit.

Final answer: C