Chapman Company obtains 100 percent of Abernethy Companys stock on January 1, 2020. As of that date, Abernethy has the following trial balance:

	Debit			Credit
Accounts payable				$	50,800
Accounts receivable	$	48,200
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		161,000
Cash and short-term investments		81,750
Common stock					250,000
Equipment (net) (5-year remaining life)		242,500
Inventory		135,500
Land		129,500
Long-term liabilities (mature 12/31/23)					167,000
Retained earnings, 1/1/20					297,350
Supplies		16,700
Totals	$	815,150		$	815,150

During 2020, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000. During 2021, Abernethy reported net income of $134,750 while declaring and paying dividends of $34,000.

Assume that Chapman Company acquired Abernethys common stock for $694,850 in cash. As of January 1, 2020, Abernethys land had a fair value of $140,700, its buildings were valued at $201,800, and its equipment was appraised at $217,250. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.

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

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

4. Prepare entry I to eliminate the income accrual for 2020 less the amortization recorded by the parent using the equity method.

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

6. Prepare entry E to recognize current year amortization expense.

7. Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.

8. Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021.

9. Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021.

10. Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method.

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

12. Prepare entry E to recognize current year amortization expense.