Problem $1-25($Algo$)($LO $1-4,1-5,1-7)$

Matthew, Inc., owns $30$ percent of the outstanding stock of Lindman Company and has the ability to significantly influence the

investee's operations and decision making. On January $1,2021,$ the balance in the Investment in Lindman account is $$372,000.$

Amortization of excess fair value associated with the $30\%$ ownership is $$11,700$ per year. In $2021,$ Lindman earns an income

of $$106,500$ and declares cash dividends of $$35,500.$ Previously, in $2020,$ Lindman had sold inventory costing $$47,600$ to Matthew for

$$68,000.$ Matthew consumed all but $25$ percent of this merchandise during $2020$ and used the rest during $2021.$ Lindman sold

additional inventory costing $$59,400$ to Matthew for $$90,000$ in $2021.$ Matthew did not consume $40$ percent of these $2021$ purchases

from Lindman until $2022$

a$.$ What amount of equity method income would Matthew recognize in $2021$ from its ownership interest in Lindman?

b$.$ What is the equity method balance in the Investment in Lindman account at the end of $2021?$