White Company Owns 60% of Cody Company

Multiple Choice

White Company owns 60% of Cody Company. Separate tax returns are required. For 2010, White's operating income (excluding taxes and any income from Cody) was $300,000 while Cody reported a pretax income of $125,000. During the period, Cody paid a total of $25,000 in cash dividends; $15,000 (60%) to White and $10,000 to the noncontrolling interest. White paid dividends of $180,000. The income tax rate for both companies is 30%.
-Compute Cody's undistributed earnings for 2011.

A) $62,500.
B) $125,000.
C) $87,500.
D) $100,000.
E) $70,000.