Assume that an investor owns 20% of an investee, and accounts for its investment using the equity method. At the beginning of the year, the Equity Investment was reported on the investors balance sheet at $480,000. During the year, the investee reported net income of $120,000 and paid dividends of $72,000. In addition, the investor sold inventory to the investee, realizing a gross profit of $48,000 on the sale. At the end of the year, 25% of the inventory remained unsold by the investee.

a. How much equity income should the investor report for the year?