Assume an Investor Company Uses the Equity Method of Accounting

Assume an investor company uses the equity method of accounting for its investment in an investee company's voting shares.During the year the investee declared and paid a cash dividend, which was recorded with the following entry by the investor company:
Cash A) xx
Equity in earnings of investment SE) xx
The effect of this entry would be to:

A) Have no effect on the investment account or retained earnings
B) Overstate the investment account and understate retained earnings
C) Understate the investment account and overstate net income
D) Overstate both net income and the investment account