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				$	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 12/31/23)					151,000
Retained earnings, 1/1/20					273,050
Supplies		15,200
Totals	$	783,550		$	783,550

During 2020, Abernethy reported net income of $98,500 while declaring and paying dividends of $12,000. During 2021, 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, 2020, 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, 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.