Jeff Company Purchased Common Stock of Garcia Company as a Long-Term

Multiple Choice

Jeff Company purchased common stock of Garcia Company as a long-term investment.During the current year, Garcia Company earned $4,000,000 and paid dividends of $1,000,000.Assume that Jeff Company owns 10% of the outstanding shares of Garcia Company.Garcia Company's dividend will affect Jeff Company by _____.

A) increasing cash and stockholders' equity by $100,000
B) increasing investments and stockholders' equity by $100,000
C) increasing cash and decrease investments by $100,000
D) none of these answers is correct