Question
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following trial balance: DebitCreditAccounts payable$55,800Accounts
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following trial balance:
DebitCreditAccounts payable$55,800Accounts receivable$42,500Additional paid-in capital50,000Buildings (net) (4-year remaining life)209,000Cash and short-term investments67,250Common stock250,000Equipment (net) (5-yearremaining life)357,500Inventory136,000Land114,000Long-term liabilities (mature 12/31/20)168,500Retained earnings, 1/1/17414,650Supplies12,700Totals$938,950$938,950
During 2017, Abernethy reported net income of $104,500 while declaring and paying dividends of $13,000. During 2018, Abernethy reported net income of $137,750 while declaring and paying dividends of $34,000.
Assume that Chapman Company acquired Abernethy's common stock by paying $921,650 in cash. All of Abernethy's 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.
Prepare the 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.)
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