Question
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Accounts payable Accounts receivable Additional paid-in capital Credit $ 56,400 $ 43,900 50,000 Buildings (net) (4-year remaining life) Cash and short-term investments 217,000 76,750 Common stock 250,000 Equipment (net) (5-year remaining life) 367,500 Inventory 96,500 Land 122,000 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 182,500 396,250 Supplies Totals 11,500 $935,150 $ 935,150 During 2020, Abernethy reported net income of $103,500 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $145,250 while declaring and paying dividends of $47,000. Assume that Chapman Company acquired Abernethy's common stock for $800,660 in cash. Assume that the equipment and long- term liabilities had fair values of $390,450 and $151,340, respectively, on the acquisition date. Chapman uses the initial value method to account for its 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.) No 1 Date December 31, 202 Common stock-Abernethy Additional paid-in capital Retained earnings-1/1/20 Investment in Abernethy 2 December 31, 202 Equipment 3 4 5 6 7 8 9 Long-term liabilities Goodwill Investment in Abernethy December 31, 202 Dividend income Dividends declared Answer is not complete. Accounts December 31, 202 Depreciation expense Interest expense Equipment Long-term liabilities December 31, 202 Investment in Abernethy Retained earnings-1/1/21 December 31, 202 Common stock-Abernethy Additional paid-in capital Retained earnings-1/1/21 Investment in Abernethy December 31, 202 Equipment Long-term liabilities Goodwill Investment in Abernethy December 31, 202 Dividend income Dividends declared December 31, 202 Depreciation expense Interest expense Equipment Long-term liabilities 0000 00 0000 00 0000 0000 00 0000 Debit 250,000 Credit 50,000 396,250 696,250 65,500x 50,800 x 12,000 97,050 x 31,250 X 13,000 13,000 13,000x 13,000 250,000 000 50,000 486,750 6,450x 786,750
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