Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $ 55,800
Accounts receivable $ 42,500
Additional paid-in capital 50,000
Buildings (net) (4-year remaining life) 209,000
Cash and short-term investments 67,250
Common stock 250,000
Equipment (net) (5-year remaining life) 357,500
Inventory 136,000
Land 114,000
Long-term liabilities (mature 12/31/23) 168,500
Retained earnings, 1/1/20 414,650
Supplies 12,700
Totals $ 938,950 $ 938,950

During 2020, Abernethy reported net income of $104,500 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $137,750 while declaring and paying dividends of $34,000.

Assume that Chapman Company acquired Abernethys common stock by paying $921,650 in cash. All of Abernethys 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, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Finance, European Edition

Authors: Peter Moles, Robert Parrino, David S. Kidwell

1st Edition

0470683708, 9780470683705

More Books

Students also viewed these Accounting questions