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				$	53,700
Accounts receivable	$	41,000
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		184,000
Cash and short-term investments		77,250
Common stock					250,000
Equipment (net) (5-year remaining life)		400,000
Inventory		117,500
Land		107,500
Long-term liabilities (mature 12/31/23)					173,000
Retained earnings, 1/1/20					417,450
Supplies		16,900
Totals	$	944,150		$	944,150

During 2020, Abernethy reported net income of $98,000 while declaring and paying dividends of $12,000. During 2021, Abernethy reported net income of $128,250 while declaring and paying dividends of $39,000.

Assume that Chapman Company acquired Abernethys common stock for $851,300 in cash. As of January 1, 2020, Abernethys land had a fair value of $124,200, its buildings were valued at $254,400, and its equipment was appraised at $378,500. 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.)

• 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.