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				$	57,600
Accounts receivable	$	40,600
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		126,000
Cash and short-term investments		65,750
Common stock					250,000
Equipment (net) (5-year remaining life)		390,000
Inventory		100,000
Land		110,000
Long-term liabilities (mature 12/31/20)					187,500
Retained earnings, 1/1/17					306,850
Supplies		19,600
Totals	$	851,950		$	851,950

During 2017, Abernethy reported net income of $108,500 while declaring and paying dividends of $14,000. During 2018, Abernethy reported net income of $139,750 while declaring and paying dividends of $54,000.

Assume that Chapman Company acquired Abernethys common stock for $719,200 in cash. As of January 1, 2017, Abernethys land had a fair value of $122,700, its buildings were valued at $185,200, and its equipment was appraised at $353,250. Chapman uses the equity method for this 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.)

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

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

Prepare entry I to eliminate $108,500 income accrual for 2017 less $7,450 amortization recorded by parent using equity method.

Prepare entry D to eliminate intra-entity dividend transfers.

Prepare entry E to recognize current year amortization expense.

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.

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].

• Prepare entry I to eliminate $139,750 income accrual less $7,450 amortization recorded by parent during 2018 using equity method.
• Prepare entry D to eliminate intra-entity dividend transfers.
• Prepare entry E to recognize current year amortization expense.