$(20$ pts$)$ Quahog purchased $15\%$ of Clam on January $1,2021$ for $$340,000$ in cash and did not have the ability to exercise significant influence.

The price was $15\%$ of Clam's book value. During $2021,$ Clam reported income of $$500,000$ and paid a dividend of $$20,000.$

On December $31,2021,$ the market value of Quahog's investment in Clam was $$320,000.$

Then, on January $1,2022,$ Quahog purchased an additional $20\%$ of Clam for $$500,000$ in cash and was able to have significant influence.

Quahog had been using the fair value method.

a$.$ Journalize all necessary entries on the books of Quahog using the fair value method in $2021,$ including the initial purchase.

b$.$ Journalize the conversion to the equity method in $2022.$