Question
Chapman Company obtains 100 percent of Abernethy Companys stock on January 1, 2014. As of that date, Abernethy has the following trial balance: Debit Credit
Chapman Company obtains 100 percent of Abernethy Companys stock on January 1, 2014. 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 life) | 145,000 | ||||
Cash and short-term investments | 84,250 | ||||
Common stock | 250,000 | ||||
Equipment (net) (5-year life) | 257,500 | ||||
Inventory | 106,000 | ||||
Land | 129,000 | ||||
Long-term liabilities (mature 12/31/17) | 151,000 | ||||
Retained earnings, 1/1/14 | 273,050 | ||||
Supplies | 15,200 | ||||
Totals | $ | 783,550 | $ | 783,550 | |
During 2014, Abernethy reported net income of $98,500 while declaring and paying dividends of $12,000. During 2015, Abernethy reported net income of $132,250 while declaring and paying dividends of $48,000. |
Assume that Chapman Company acquired Abernethys common stock for $675,380 in cash. Assume that the equipment and long-term liabilities had fair values of $278,850 and $120,920, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment. |
Prepare consolidation worksheet entries for December 31, 2014, and December 31, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
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