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: DebitCredit Accounts
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance:
DebitCredit
Accounts payable$52,800
Accounts receivable$49,500
Additional paid-in capital50,000
Buildings (net) (4-yearremaining life)174,000
Cash and short-term investments84,000
Common stock250,000
Equipment (net) (5-year remaining life)315,000
Inventory137,500
Land90,500
Long-term liabilities (mature 12/31/23)188,500
Retained earnings, 1/1/20323,600
Supplies14,400
Totals$ 864,900$864,900
During 2020, Abernethy reported net income of $129,000 while declaring and paying dividends of $16,000. During 2021, Abernethy reported net income of $176,000 while declaring and paying dividends of $38,000.
Assume that Chapman Company acquired Abernethy's common stock for $733,100 in cash. As of January 1, 2020, Abernethy's land had a fair value of $101,000, its buildings were valued at $242,000, and its equipment was appraised at $279,500. 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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