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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 receivable Cash and short-term investments Accounts payable Additional paid-in capital Buildings (net) (4-year remaining life) Common stock Credit $ 59,900 $ 43,700 50,000 123,000 80,500 250,000 Equipment (net) (5-year remaining life) Inventory 270,000 138,500 Land 118,500 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 175,000 257,100 Supplies Totals 17,800 $792,000 $ 792,000 During 2020, Abernethy reported net income of $112,000 while declaring and paying dividends of $14,000. During 2021, Abernethy reported net income of $163,250 while declaring and paying dividends of $54,000. Assume that Chapman Company acquired Abernethy's common stock for $651,550 in cash. As of January 1, 2020, Abernethy's land had a fair value of $132,100, its buildings were valued at $166,600, and its equipment was appraised at $242,750. 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.)
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