Question: Pane uses the equity method to ac596 count for its investment in Sky. Information from separate company operations follows: Pane Sky Retained earnings 12/31/10 $3,200,000

Pane uses the equity method to ac596 count for its investment in Sky. Information from separate company operations follows:

Pane Sky Retained earnings—

12/31/10 $3,200,000 $925,000 Net income—six months ended 6/30/11 800,000 275,000 Dividends paid—3/25/11 750,000 --

What amount of retained earnings would Pane report in its June 30, 2011 consolidated balance sheet?

a. $5,200,000

b. $4,450,000

c. $3,525,000

d. $3,250,000

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