An investor company owns 25% of the common stock of an investee company. The investor has significant influence over the investee, and acquired its equity interest in the investee on January 1, 2021 for $1,029,000. On the date of acquisition, the investee’s stockholders’ equity was $4,116,000 and the fair values of the investee’s individual net assets were equal to their reported book values. During the year ended December 31, 2021, the investee reported net income of $98,000 and dividends of $19,600. During the year ended December 31, 2022, the investee reported net income of $117,600 and dividends of $29,400 The investor routinely sells inventory to the investee at a 30% profit margin. At December 31, 2021 and 2022, the investee held inventories purchased from the investor for $58,800 and $78,400 respectively. (All of these inventories on hand at the end of the year are sold by the investee to unaffiliated companies in the next period.) What is the balance in the Equity Investment account on December 31, 2022? Select one: a. $1,070,650 b. $1,064,770 c. $1,029,000 d. $1,117,200
