Jerome Company Purchased Common Stock in Gonzalez Company

Multiple Choice

Jerome Company purchased common stock in Gonzalez Company.Jerome Company treats the investment as available-for-sale securities.During the current year,Gonzalez Company earned $4,000,000 and paid dividends of $1,000,000.Assume that Jerome Company owns 10% of the outstanding shares of Gonzalez Company.Gonzalez Company's dividend will affect Jerome Company by ________.

A) increasing cash and investments by $100,000
B) increasing investments and investment revenue by $100,000
C) increasing cash and investment revenue by $100,000
D) increasing cash and decreasing investments by $100,000