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Three days ago, John's boss asked him to prepare a quarterly report, and he said that he would gladly do so as soon as all the data was in.
This answer choice correctly uses [to] do so to refer to a previous action (prepare a...report).
This answer choice is grammatically incorrect. A pronoun (in this case, it) refers to a previously mentioned noun. If we wish to refer to a previously mentioned verb, we need to use the phrase to do so or doing so.
What helps us identify this question as a pronoun question is the following Stop Sign:
Any pronoun in the underlined part or after it.
While this answer choice is grammatically correct, it is stylistically flawed - redundant - as a result of replacing the single word gladly with the three-word phrase be glad to.
This answer does not fit into the original sentence because of the omission of the word soon.
This answer does not fit into the original sentence because of the omission of the word as (before the word soon).