12 points Return to question Problem 5-18 (Algo) (LO 5-3, 5-4, 5-5) 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: Inventory Dividends Purchases from Net Income Declared Corgan 2020 $190, 000 $39, 000 $140, 000 2021 170, 000 49, 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. 3. Compute the equity method balance In Corgan's Investment in Smashing, |nc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. 6 Answer is complete but not entirely correct. 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. 5 885.5000 RequiredB > 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 rst account eld.) 1 1 Investment in Smashing 9 21.0009 Cost of goods sold 0 21.0000 2 2 Common stock - Smashing 0 7400000 Retained earnings - Smashing 9 441.0000 Investment in Smashing 0 826.7000 Nonoontrolling interest 0 354.3000 3 3 Covenants 0 114,0000 Investment in Smashing 0 79.8000 Nonoontrolling interest 0 34.2000 4 4 Equity in earnings of Smashing 0 111.8009 Investment in Smashing 0 111.8006 5 5 Investment in Smashing 0 34,3000 Dividends declared 0 34.3000 6 6 Amortization expense 0 6,0000 Covenants a 6.0000 7 7 Sales 0 160.0000 Cost of goods sold 0 160.0000 3 8 Cost of goods sold 0 24,0000 Inventory 0 24.0000