Q5. 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				$	50,000
Accounts receivable	$	40,000
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		120,000
Cash and short-term investments		60,000
Common stock					250,000
Equipment (net) (5-year remaining life)		200,000
Inventory		90,000
Land		80,000
Long-term liabilities (mature 12/31/20)					150,000
Retained earnings, 1/1/17					100,000
Supplies		10,000
Totals	$	600,000		$	600,000

During 2017, Abernethy reported net income of $80,000 while declaring and paying dividends of $10,000. During 2018, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000.

Assume that Chapman Company acquired Abernethys common stock by paying $520,000 in cash. All of Abernethys accounts are estimated to have a fair value approximately equal to present book values. Chapman uses the partial equity method to account for its investment.

Prepare the 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.)

view transaction list X: Prepare entry S to eliminate stockholders' equity accounts of subsidiary. 1 2 Prepare entry A to recognize goodwill portion of the original acquisition fair value. 3 Prepare entry I to eliminate intra-entity income accrual for the current year based on the parent's usage of the partial equity method. Prepare entry D to eliminate intra-entity dividend transfers 4 5 Prepare entry E to recognize 2017 amortization expense view transaction list transaction list EX Credit Debit Prepare entry *C to recognize 2018 amortization expense 7 Prepare entry S to eliminate beginning of year stockholders' equity accounts of subsidiary-the retained earnings balance has been adjusted for 2017 income and dividends 8 Prepare entry A to recognize original goodwill balance. Prepare entry I to eliminate Intra-entity Income accrual for the current year. 9 10 Prepare entry D to eliminate Intra-entity dividend transfers