Phips CoPurchases 100 Percent of Sips Company on January 1,20X2,when Phips

question 26

Multiple Choice

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)$108,000
• B)$120,000
• C)$132,000
• D)$140,000

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