Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribedimage text in transcribed

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

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_2

Step: 3

blur-text-image_3

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

The Internal Auditing Pocket Guide Preparing Performing Reporting And Follow Up

Authors: J.P. Russell

2nd Edition

1636941303, 978-1636941301

More Books

Students also viewed these Accounting questions

Question

explain how to create and maintain a cost leadership position

Answered: 1 week ago