Jubilee, Incorporated, owns 40 percent of JPW Company and applies the equity method. During the current year, Jubilee buys inventory costing $137,600 and then sells it to JPW for $172,000. At the end of the year, JPW still holds only $29,500 of merchandise. What amount of gross profit must Jubilee defer in reporting this investment using the equity method?
Multiple Choice
$2,360
$7,160
$5,900
$12,560