Based on the various transactions, the addition to retained earnings was <u>A. $5,075.88</u>
<h3>What was the after tax net profit ?</h3>
This can be found as:
= (Revenues - Interest expense - Depreciation - Cost of goods sold - Admin expenses) x ( 1 - tax)
= (42,629 - 1,230 - 2,609 - 23,704 - 7,040) x ( 1 - 22%)
= $6,275.88
<h3>Addition to retained earnings </h3>
= After tax net profit - Dividends paid
= 6,275.88 - 1,200
= $5,075.88
In conclusion, option A is correct.
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