Chapman Company obtains 100 percent of Abernethy Companys stock on January 1, 2017. As of that date, Abernethy has the following trial balance:

	Debit			Credit
Accounts payable				$	58,900
Accounts receivable	$	41,500
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		211,000
Cash and short-term investments		70,750
Common stock					250,000
Equipment (net) (5-year remaining life)		430,000
Inventory		139,000
Land		121,500
Long-term liabilities (mature 12/31/20)					174,000
Retained earnings, 1/1/17					498,450
Supplies		17,600
Totals	$	1,031,350		$	1,031,350

During 2017, Abernethy reported net income of $120,000 while declaring and paying dividends of $15,000. During 2018, Abernethy reported net income of $170,000 while declaring and paying dividends of $48,000.

Assume that Chapman Company acquired Abernethys common stock for $902,200 in cash. As of January 1, 2017, Abernethys land had a fair value of $133,000, its buildings were valued at $277,000, and its equipment was appraised at $393,500. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1-Prepare entry S to eliminate stockholders' equity accounts of subsidiary.

2-Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill

3-Prepare entry I to eliminate $120,000 income accrual for 2017 less $9,200 amortization recorded by parent using equity method.

4-Prepare entry D to eliminate intra-entity dividend transfers.

5-Prepare entry E to recognize current year amortization expense.

6-Prepare entry S to eliminate beginning stockholders' equity of subsidiarythe Retained Earnings account has been adjusted for 2017 income and dividends. Entry *C is not needed because equity method was applied.

7-Prepare entry A to recognize allocations relating to investmentbalances shown here are as of beginning of current year [original allocation less excess amortizations for the prior period].

8-Prepare entry I to eliminate $170,000 income accrual less $9,200 amortization recorded by parent during 2018 using equity method.

9-Prepare entry D to eliminate intra-entity dividend transfers.

10-Prepare entry E to recognize current year amortization expense.