On January 1, 20X9, Princeton Company acquired 80 percent of the common stock and 60 percent of the preferred stock of Stanford Company, for $400,000 and $60,000, respectively. At the time of acquisition, the fair value of the common shares of Stanford Company held by the noncontrolling interest was $100,000. Stanford Company's balance sheet contained the following balances: ps ($5 par value) $100k
cs ($10 par value) $200k
RE $300K
Total stockholders' equity $600

For the year ended December 31, 20X9, Company B reported net income of $100,000 and paid dividends of $40,000. The preferred stock is cumulative and pays an annual dividend of 10 percent.

1. Based on the preceding information, what will be the equity method income reported by Company A from its investment in Company B during 20X9?

a. $32,000
b. $30,000
c. $72,000
d. $48,000

2. Based on the preceding information, the consolidating entry to prepare the consolidated financial statements for Company A as of December 31, 20X9 will include a credit to Investment in Company B—Common Stock for:

a. 506,000
b. 440,000
c. 400,000
d. 500,000

3. Based on the preceding information, the consolidating entry to prepare the consolidated financial statements for Company A as of December 31, 20X9 will include a credit to noncontrolling interest in net income of Company B for:

a. 140,000
b. 154,000
c. 152,000
d. 150,000