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Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit 54,200 $ $ 42,900 50,000 192,000 73,500 250,000 Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory Land Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies Totals 245,000 99,000 128,500 160,000 279,200 12,500 $ 793,400 $ 793,400 During 2020, Abernethy reported net income of $120,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $172,000 while declaring and paying dividends of $40,000. Assume that Chapman Company acquired Abernethy's common stock for $714,650 in cash. As of January 1, 2020, Abernethy's land had a fair value of $139,200, its buildings were valued at $262,000, and its equipment was appraised at $218,000. 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.) Consolidation Worksheet Entries Prepare entry *C to convert parent's beginning retained earnings to full accrual basis. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2020 Record entry Clear entry view consolidation entries
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