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
Accounts payable				$	50,300
Accounts receivable	$	47,500
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		201,000
Cash and short-term investments		61,750
Common stock					250,000
Equipment (net) (5-year remaining life)		447,500
Inventory		127,500
Land		124,000
Long-term liabilities (mature 12/31/23)					162,000
Retained earnings, 1/1/20					514,850
Supplies		17,900
Totals	$	1,027,150		$	1,027,150

During 2020, Abernethy reported net income of $97,000 while declaring and paying dividends of $12,000. During 2021, Abernethy reported net income of $141,250 while declaring and paying dividends of $48,000.

Assume that Chapman Company acquired Abernethy’s common stock for $933,200 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $137,700, its buildings were valued at $255,400, and its equipment was appraised at $420,750. 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.)

1. Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.
2. Prepare entry S to eliminate stockholders' equity accounts of subsidiary.
3. Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill.
4. Prepare entry I to eliminate the income accrual for 2020 less the amortization recorded by the parent using the equity method.
5. Prepare entry D to eliminate intra-entity dividend transfers.
6. Prepare entry E to recognize current year amortization expense.
7. Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.
8. Prepare entry S to eliminate stockholders' equity accounts of the subsidiary for 2021.
9. Prepare entry A to recognize allocations attributed to specific accounts at the acquisition date for 2021.
10. Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method.
11. Prepare entry D to eliminate intra-entity dividend transfers.
12. Prepare entry E to recognize current year amortization expense.