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The answer is C. Katie’s new chair was on sale for 15% off, making it cost $137.32, but Katie wrote down the before-sale price.
By adding back the recorded price of the new chair $161.55 to the balance $682.87, Katie gets $844.42. Subtracting the real cost of the chair which was $137.32, it yields $707.10, which matches Katie's ending balance.