Question
On January 1, 2008, William Company acquired 30 percent of eGate Company's common stock, at underlying book value of $100,000. eGate has 100,000 shares of
On January 1, 2008, William Company acquired 30 percent of eGate Company's common stock, at underlying book value of $100,000. eGate has 100,000 shares of $2 par value, 5 percent cumulative preferred stock outstanding. No dividends are in arrears. eGate reported net income of $150,000 for 2008 and paid total dividends of $72,000. William uses the equity method to account for this investment.
Based on the preceding information, what amount would William Company receive as dividends from eGate for the year?
A. $62,000 B. $21,600 C. $18,600 D. $54,000
With calculations please .
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