Alex, Inc., buys 40 percent of Steinbart Company on January 1, 2017, for $1,028,000. The equity method of accounting is to be used. Steinbarts net assets on that date were $2.40 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows:

Year	Cost to Steinbart	Transfer Price	Amount Held by Alex at Year-End (at Transfer Price)
2017	$98,600	$116,000	$29,000
2018	170,820	219,000	68,000

Inventory held at the end of one year by Alex is sold at the beginning of the next.

Steinbart reports net income of $94,750 in 2017 and $128,250 in 2018 and declares $30,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2018?

Multiple Choice

• $58,956.

• $52,056.

• $38,896.

• $43,656.