During 2017, Abernethy reported net income of $120,000 while declaring and paying dividends of $15,000. During 2018, Abernethy reported net income of $170,000 while declaring and paying dividends of $48,000.

Assume that Chapman Company acquired Abernethys common stock for $902,200 in cash. As of January 1, 2017, Abernethys land had a fair value of $133,000, its buildings were valued at $277,000, and its equipment was appraised at $393,500. 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.)

1. Prepare the S entry 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 $120,000 of income accrual for 2017 less $9,200 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 S entry to eliminate beginning stockholders equity of subsidiary-the 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 related to investment-balances shown here are as of beginning of current year (original allocation less excess amortizations for the prior period).

8. Prepare entry I to eliminate $170,000 income accrual less $9,200 amortization recorded by the parent during 2018 using the equity method.

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

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

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 41,500 211,000 Credit $58,900 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 50,000 70,750 250,000 430,000 139,000 121,500 174,000 498,450 17,600 Totals $1,031,350 $1,031,350