On January 2, 2006, Saxe Company purchased 20% of Lex Corporation’s common stock for $150,000. Saxe Corporation intends to hold the stock indefinitely. This investment did not give Saxe the ability to exercise significant influence over Lex. During 2006 Lex reported net income of $175,000 and paid cash dividends of $100,000 on its common stock. There was no change in the market value of the common stock during the year. The balance in Saxe’s investment in Lex Corporation account at December 31, 2006 should be

  1. $130,000
  2. $150,000
  3. $165,000
  4. $185,000