An Investor That Uses the Equity Method of Accounting for Its

An investor that uses the equity method of accounting for its investment in a 40 percent-owned investee that earned $50,000 and paid $8,000 in dividends,made the following entries:
Investment in Equity Securities
20,000
Equity in Earnings of Investee
20,000
Cash
3,200
Dividend Revenue
3,200
What effect will these entries have on the parent corporation's statement of financial position?

A) Investment in subsidiary understated, retained earnings understated.
B) Investment in subsidiary overstated, retained earnings overstated.
C) Investment in subsidiary overstated, retained earnings understated.
D) Financial position will be fairly stated.