Required $A$

Prepare the worksheet adjustments for the December $31,2021,$ consolidation of Corgan and Smashi

transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$On January $1,2020,$ Corgan Company acquired $70$ percent of the outstanding voting stock of Smashing, Inc., for a total of $$1,085,000$

in cash and other consideration. At the acquisition date, Smashing had common stock of $$820,000,$ retained earnings of $$370,000,$

and a noncontrolling interest fair value of $$465,000.$ 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:

Corgan sells inventory to Smashing using a $60$ percent markup on cost$.$ At the end of $2020$ and $2021,50$ 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.

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Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December $31,2021.$