Question: Please make sure answer is 100% correct. Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on

Please make sure answer is 100% correct.

Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on selling price. The following data are available pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2012.

Purchase by Posito: 2012: $8,000 2013: 12,000 2014: $15,000

Ending Inventory on Posito's Books: 2012: $1,200 2013: $4,000 2014: $3,000

Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends.

Gargiulo's Net Income: 2012: $70,000 2013: $85,000 2014: $94,000

Dividends Paid by Gargiulo's : 2012: $10,000 2013: $10,000 2014: $15,000

Assuming all the above remain unchanged except 25% is percentage of markup on cost, compute the equity in earnings of Gargiulo reported on Posito's books for 2012.

A. $63,000.

B. $62,760.

C. $69,760.

D. $70,000.

E. $62,784.

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