On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $805,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $740,000, retained earnings of $290,000, and a noncontrolling interest fair value of $345,000. 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: 2020 2021 Net Income $190,000 170,000 Dividends Declared $39,000 49,000 Inventory Purchases from Corgan $140,000 160,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 30 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 $ 969,000 Complete this question by entering your answers in the tabs below. 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 1 1 Investment in Smashing Cost of goods sold Debit 15,750 Credit 15,750 2 2 Cost of goods sold Inventory 18,000* 18.000 3 3 Amortization expense 6.000 * Covenants 6.000x 4 4 Sales 5 5 8 6 Cost of goods sold Investment in Smashing Dividends declared Equity in earnings of Smashing Investment in Smashing * ☑ 133,000 133,000 34,300 34,300 112,500 x 112,500x