On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,190,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $850,000, retained earnings of $400,000, and a noncontrolling interest fair value of $510,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Question 1:

On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,190,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $850,000, retained earnings of $400,000, and a noncontrolling interest fair value of $510,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

	Net Income			Dividends Declared			Inventory Purchases from Corgan
2017	$	300,000		$	50,000		$	250,000
2018		280,000			60,000			270,000
Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 50 percent of the current year purchases remain in Smashing's inventory. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018. Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing. Required A: Compute the equity method balance in Corgans Investment in Smashing, Inc., account as of December 31,2018. Investment balance 12/31/18 $______________ Required B: Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing. (If no entry required for a transaction/event, select No journal entry required in the firs account field.

1	1	Investment in Smashing
		Cost of goods sold
2	2	Common stock Smashing
		Retained earnings - Smashing
		Investment in Smashing
		Noncontrolling interest
3	3	Covenants
		Investment in Smashing
		Noncontrolling interest
4	4	Equity in earnings of Smashing
		Investment in Smashing
5	5	Investment in Smashing
		Dividends declared
6	6	Amortization expense
		Covenants
7	7	Sales
		Cost of goods sold
8	8	Cost of goods sold
		Inventory