Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on selling price. The following data are available pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2012.

	2012	2013	2014
Purchase by Posito	8000	12000	15000
ending inventory on Posito's book	1200	4000	3000

Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends.

	2012	2013	2014
Gargiulo's net income	70000	85000	94000
dividends paid by Gargiulo	10000	10000	15000

Compute the equity in earnings of Gargiulo reported on Posito's books for 2014.

$84,600.

$84,375.

$83,925.

$84,825.

$84,850.