Chapman Company obtains 100 percent of Abernethy Companys stock on January 1, 2020. As of that date, Abernethy has the following trial balance:

	Debit			Credit
Accounts payable				$	54,200
Accounts receivable	$	42,900
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		192,000
Cash and short-term investments		73,500
Common stock					250,000
Equipment (net) (5-year remaining life)		245,000
Inventory		99,000
Land		128,500
Long-term liabilities (mature 12/31/23)					160,000
Retained earnings, 1/1/20					279,200
Supplies		12,500
Totals	$	793,400		$	793,400

During 2020, Abernethy reported net income of $120,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $172,000 while declaring and paying dividends of $40,000.

Assume that Chapman Company acquired Abernethys common stock for $714,650 in cash. As of January 1, 2020, Abernethys land had a fair value of $139,200, its buildings were valued at $262,000, and its equipment was appraised at $218,000. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021

1. Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.

2. Prepare entry S to eliminate stockholders' equity accounts of subsidiary.

3. Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill.

4. Prepare entry I to eliminate the income accrual for 2020 less the amortization recorded by the parent using the equity method.

5. Prepare entry D to eliminate intra-entity dividend transfers.

6. Prepare entry E to recognize current year amortization expense.

7. Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.

8. Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021.

9. Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021.

10. Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method.

11. Prepare entry D to eliminate intra-entity dividend transfers.

12. Prepare entry E to recognize current year amortization expense.