Monroe Company purchased $80\%$ of Adams Company on January $1,20$ X$1.$

The purchase price paid was $$600,000.$ On that day, the book value of Adams

was $$500,000.$ Excess of cost over book value is due to goodwill.

Included in Adams's income are intercompany sales to Monroe of $$40,000$ with a cost to Adams of $$25,000.$

$30\%$ of this inventory is on hand in the Monroe inventory at December $31,203.$ In addition, inventory

sold at a profit of $$5,000$ was in the inventory of Monroe at December $31,202.$

Adams reported income of $$100,000$ in $203$ but paid no dividends.

a$.$ Prepare a schedule of Excess of Cost over Book Value at the date of purchase.

b$.$ For $20$X$3,$ prepare on the books of Monroe the full equity method journal entries.

Dr$.Cr.$