Jeff Company Purchased, as a Long- Term Investment, Common Stock

Jeff Company purchased, as a long- term investment, common stock of Garcia Company. 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 net income will affect Jeff Company by:

A) increasing cash and investments by $400,000
B) increasing cash and stockholders' equity by $400,000
C) increasing stockholders' equity and investments by $400,000
D) None of these answers is correct.