Question
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
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 During 2017, Abernethy reported net income of $98,500 while declaring and paying dividends of $12,000. During 2018, Abernethy reported net income of $132,250 while declaring and paying dividends of $48,000. Assume that Chapman Company acquired Abernethys common stock for $699,850 in cash. As of January 1, 2017, Abernethys land had a fair value of $141,400, its buildings were valued at $217,400, and its equipment was appraised at $217,500. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018.
| Debit | Credit | ||||
| Accounts payable | $ | 59,500 | |||
| Accounts receivable | $ | 46,600 | |||
| Additional paid-in capital | 50,000 | ||||
| Buildings (net) (4-year remaining life) | 145,000 | ||||
| Cash and short-term investments | 84,250 | ||||
| Common stock | 250,000 | ||||
| Equipment (net) (5-year remaining life) | 257,500 | ||||
| Inventory | 106,000 | ||||
| Land | 129,000 | ||||
| Long-term liabilities (mature 12/31/20) | 151,000 | ||||
| Retained earnings, 1/1/17 | 273,050 | ||||
| Supplies | 15,200 | ||||
| Totals | $ | 783,550 | $ | 783,550 | |
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
9781285586618
