Phips Co. purchases 100 percent of Sips Company on January 1, 20X2, when Phips' retained earnings balance is $320,000 and Sips' is $120,000. During 20X2, Sips reports $20,000 of net income and declares $8,000 of dividends. Phips reports $125,000 of separate operating earnings plus $20,000 of equity-method income from its 100 percent interest in Sips; Phips declares dividends of $35,000.Based on the preceding information, what is Sips' post-closing retained earnings balance on December 31, 20X2?
A. $132,000
B. $108,000
C. $140,000
D. $120,000
Answer: A
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