Konica Company acquires 40% of the voting stock of Lexmark Corporation on January 1, 2017, for $60,000,000, and treats it as an equity method investment. There were no basis differences. Lexmark reports total net income of $20,000,000 for the period 2017 - 2020, and $5,000,000 for 2021. Lexmark paid no dividends during the period 2017 2020 but paid $1,000,000 in dividends in 2021. The accounting year for both companies ends December 31. Lexmark sells merchandise to Konica at a markup of 30% on cost. The inventory balances held by Konica, purchased from Lexmark, are as follows.

Inventory Held by Konica; Purchased from Lexmark
December 31, 2020	$1,560,000
December 31, 2021	2,600,000

Required:

a. Calculate equity in net income of Lexmark, reported on Konicas 2021 income statement.

a)	1.76 million

b)	1.904 million

c)

2 million

d)	2.24 million

b. Calculate investment in Lexmark, reported on Konicas December 31, 2021 balance sheet

a)	69.36 million

b)	68 million

c)	60 million

d)	67.856 million