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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 $ 56,400
Accounts receivable $ 43,900
Additional paid-in capital 50,000
Buildings (net) (4-year remaining life) 217,000
Cash and short-term investments 76,750
Common stock 250,000
Equipment (net) (5-year remaining life) 367,500
Inventory 96,500
Land 122,000
Long-term liabilities (mature 12/31/23) 182,500
Retained earnings, 1/1/20 396,250
Supplies 11,500
Totals $ 935,150 $ 935,150

During 2020, Abernethy reported net income of $103,500 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $145,250 while declaring and paying dividends of $47,000. Assume that Chapman Company acquired Abernethys common stock for $793,300 in cash. As of January 1, 2020, Abernethys land had a fair value of $134,000, its buildings were valued at $267,800, and its equipment was appraised at $336,250. 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.

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