Gargiulo Company, a 90% owned subsidiary of Posito Corporation, transfers inventory to Posito at a 25% gross profit rate. The following data are available pertaining specifically to Posito's intra-entity purchases from Gargiulo.  Gargiulo was acquired on January 1, 2017. 201720182019Purchases by Posito$8,000 $12,000 $15,000 Ending inventory on Posito's books 1,200  4,000  3,000 ??Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends.? 201720182019Gargiulo's net income$70,000 $85,000 $94,000 Dividends paid by Gargiulo 10,000  10,000  15,000 ?Compute the equity in earnings of Gargiulo reported on Posito's books for 2018.

A. $77,130.
B. $75,800.
C. $75,870.
D. $75,600.
E. $76,500.


Answer: C

Business

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