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		50900
accounts receivable	40400
additional paid-in capital		50000
building (net) (4 years remaining)	128000
cash and short-term investments	68750
common stock		250000
equipment(net)(5 years remaining)	407500
inventory	119000
land	82000
long-term liabilities(mature 12/31/20)		171500
retained earnings,1/1/17		338850
supplies	15600

During 2017, Abernethy reported net income of $124,000 while declaring and paying dividends of $16,000. During 2018, Abernethy reported net income of $164,750 while declaring and paying dividends of $60,000.

Assume that Chapman Company acquired Abernethys common stock by paying $802,850 in cash. All of Abernethys accounts are estimated to have a fair value approximately equal to present book values. Chapman uses the partial equity method to account for its investment.

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

2.Prepare entry A to recognize goodwill portion of the original acquisition fair value.

3.Prepare entry I to eliminate intra-entity income accrual for the current year based on the parent's usage of the partial equity method.

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

5.Prepare entry E.

6.Prepare entry *C.

7.Prepare entry S to eliminate beginning of year stockholders' equity accounts of subsidiarythe retained earnings balance has been adjusted for 2017 income and dividends.

8.Prepare entry A to recognize original goodwill balance.

9.Prepare entry I to eliminate Intra-entity Income accrual for the current year.

10.Prepare entry D to eliminate Intra-entity dividend transfers.

11.Prepare entry E.