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 $ 50,000
Accounts receivable $ 40,000
Additional paid-in capital 50,000
Buildings (net) (4-year remaining life) 120,000
Cash and short-term investments 60,000
Common stock 250,000
Equipment (net) (5-year remaining life) 200,000
Inventory 90,000
Land 80,000
Long-term liabilities (mature 12/31/23) 150,000
Retained earnings, 1/1/20 100,000
Supplies 10,000
Totals $ 600,000 $ 600,000

During 2020, Abernethy reported net income of $80,000 while declaring and paying dividends of $10,000. During 2021, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000.

Assume that Chapman Company acquired Abernethys common stock for $500,000 in cash. Assume that the equipment and long-term liabilities had fair values of $220,000 and $120,000, respectively, on the acquisition date. Chapman uses the initial value method to account for its 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.)image text in transcribed

SO BODOG DO ODO

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

Accounting A Business Perspective

Authors: Roger H. Hermanson, James Don Edwards, Michael W. Maher

7th Edition

0075615851, 978-0075615859

More Books

Students also viewed these Accounting questions

Question

Define just cause, due process, and duty of fair representation.

Answered: 1 week ago

Question

Who do you know that is a member of a microcultural group?

Answered: 1 week ago