Bally Corporation purchases an investment in Monte Carlo, Inc. at a purchase price of $7 million cash, representing 40% (at book value) of Monte Carlo. During the year, Monte Carlo reports net income of $1,200,000 and pays $295,000 of cash dividends. At the end of the year, the market value of Ballys investment is $8.5 million. What amount of equity earnings would be reported by Bally Corporation?

A) $118,000

B) $480,000

C) $362,000

D) $1,138,000

E) None of the above