On January 1, 20X4, Pony Company acquired 25% of Stallion Company's common stock at underlying book value of $200,000. Stallion has 80,000 shares of $10 par value, 6 percent cumulative preferred stock outstanding. No dividends are in arrears. Stallion reported net income of $270,000 for 20X4 and paid total dividends of $140,000. Pony uses the equity method to account for this investment.Based on the preceding information, what amount would Pony Company receive as dividends from Stallion for the year?
A. $37,500
B. $35,000
C. $23,000
D. $92,000
Answer: C
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