On January 1, 2020, Corgan Company acquired 60 percent of the outstanding voting stock of Smashing, Inc.. for a total of $1.080.000 In cash and other consideration. At the acquisition date, Smashing had common stock of $780,000. retained earnings of $330.000, and a noncontrolling Interest fair value of $270.000. 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: Inventory Dividends Purchases from Net Income Declared Corgan 2e2e $230,880 $43,888 $188,888 2021 210,082 53,880 200.680 Corgan sells Inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021. 40 percent of the current year purchases remain in Smashing's inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021. consolidation of Corgan and Smashing. Answer is not complete. Complete this question by entering your answers in the tabs below. Required a Required B Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. Investment balance 12/31/21 $ 1,300,000 Required A Required B Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) No Transaction Accounts Credit Debit 27,000 1 1 Investment in Smashing Cost of goods sold 27.000 2 2 780,000 Common stock - Smashing Retained earnings - Smashing Investment in Smashing Noncontrolling interest SOOS 3 3 228,000 Covenants Investment in Smashing Noncontrolling interest Ooo 182,400 45,600 4 155,400 Equity in earnings of Smashing Investment in Smashing 155,400 5 5 10 42,400 Investment in Smashing Dividends declared olo 42.400 8 6 12,000 Amortization expense Covenants Oo 12,000 7 7 200,000 Sales Cost of goods sold 200,000 00 8 8 30,000 Cost of goods sold Inventory 30,000