First, we choose the appropriate formula. This is a problem about interest, so we use the interest formula:
\begin{equation*}
\blert{I=Prt}
\end{equation*}
Next, we list the values of the variables. (Which variable is unknown?)
\begin{align*}
I \amp = \alert{42.50} \amp r \amp = \alert{0.05}\\
P \amp = \text{unknown} \amp t \amp = \alert{1}
\end{align*}
We substitute the values into the formula:
\begin{equation*}
\alert{42.50}=P(\alert{0.05})(\alert{1})
\end{equation*}
Then we solve the equation:
\begin{align*}
\dfrac{42.50}{0.05} \amp =\dfrac{P(0.05)}{0.05} \amp \amp \blert{\text{Divide both sides by}~0.05.}\\
850 \amp = P
\end{align*}
Finally, we answer the question in a sentence:
\begin{equation*}
\blert{\text{Jan's account balance was }\$850 \text{ at the beginning of the year.}}
\end{equation*}