Chapman Company obtains 100 percent of Abernethy Companys stock on January 1, 2017. As of that date, Abernethy has the following trial balance:

	Debit			Credit
Accounts payable				$	58,000
Accounts receivable	$	40,200
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		170,000
Cash and short-term investments		66,750
Common stock					250,000
Equipment (net) (5-year remaining life)		372,500
Inventory		109,500
Land		116,000
Long-term liabilities (mature 12/31/20)					165,000
Retained earnings, 1/1/17					369,150
Supplies		17,200
Totals	$	892,150		$	892,150

During 2017, Abernethy reported net income of $106,500 while declaring and paying dividends of $13,000. During 2018, Abernethy reported net income of $142,750 while declaring and paying dividends of $51,000.

Assume that Chapman Company acquired Abernethys common stock for $759,900 in cash. As of January 1, 2017, Abernethys land had a fair value of $126,400, its buildings were valued at $211,600, and its equipment was appraised at $344,500. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018

1. Prepare entry S to eliminate stockholders' equity accounts of subsidiary.

2. Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill.

3. Prepare entry I to eliminate $106,500 income accrual for 2017 less $4,800 amortization recorded by parent using equity method.

4. Prepare entry D to eliminate intra-entity dividend transfers.

5. Prepare entry E to recognize current year amortization expense.

6. Prepare entry S to eliminate beginning stockholders' equity of subsidiarythe Retained Earnings account has been adjusted for 2017 income and dividends. Entry *C is not needed because equity method was applied.

7. Prepare entry A to recognize allocations relating to investmentbalances shown here are as of beginning of current year [original allocation less excess amortizations for the prior period].

8. Prepare entry I to eliminate $142,750 income accrual less $4,800 amortization recorded by parent during 2018 using equity method.

9. Prepare entry D to eliminate intra-entity dividend transfers.

10. Prepare entry E to recognize current year amortization expense.