Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following trial balance Debit Credit $ 55,300 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 12/31/20) Retained earnings, 1/1/17 Supplies $45,800 50,000 197,000 81,500 250,000 345,000 124,500 125,000 176,500 402,900 15,900 $934,700 Totals 934,700 During 2017, Abernethy reported net income of $124,500 while declaring and paying dividends of $16,000. During 2018, Abernethy reported net income of $167,750 while declaring and paying dividends of $41,000 Assume that Chapman Company acquired Abernethy's common stock for $813,060 in cash. Assume that the equipment and long term liabilities had fair values of $368,400 and $143,940, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment. Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Consolidation Worksheet Entries 2 3 4 5 6 8 9 Prepare entry S to eliminate stockholders' equity accounts of subsidiary. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2017 Common stock - Abernethy 250,000 Additional paid-in capital 50,000 Retained earnings - 1/1/17 Investment in Abernethy 402,900 702,900 Consolidation Worksheet Entries 2 3 4 56 789 Prepare entry A to recognize allocations determined above in connection with acquisition-date fair values. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2017 Land Buildings Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 1 2 4 6 8 9 Prepare entry I to eliminate intra-entity dividend declarations recorded by parent as income. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2017 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 1 2 6 8 9 Prepare entry E to recognize 2017 amortization expense. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2017 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 2 6 7 8 9 Prepare entry *C to convert parent company figures to equity method by recognizing subsidiary's increase in book value for prior year [$124,500 net income less $16,000 dividend declaration] and excess amortizations for that period [$12,820] Note: Enter debits before credits Date Accounts Debit Credit December 31, 2018 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 2 4 5 6 7 8 Prepare entry S to eliminate beginning of year stockholders' equity accounts of subsidiary. The retained earnings balance has been adjusted for 2017 net income and dividends Note: Enter debits before credits Date Accounts Debit Credit December 31, 2018 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 2 4 5 6 7 8 9 Prepare entry A to recognize allocations relating to investment-balances shown here are as of the beginning of the current year [original allocation less excess amortizations for the prior period] Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2018 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 2 4 5 6 7 8 Prepare entry I to eliminate intra-entity dividend declarations recorded by parent as income. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2018 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 1 2 6 7 8 Prepare entry E to recognize 2018 amortization expense. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2018 Record entry Clear entry view consolidation entries