~question #4

Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following trial balance:

DebitCreditAccounts payable$55,100Accounts receivable$44,700Additional paid-in capital50,000Buildings (net) (4-yearremaining life)163,000Cash and short-term investments83,750Common stock250,000Equipment (net) (5-year remaining life)207,500Inventory122,000Land85,500Long-term liabilities (mature 12/31/20)162,500Retained earnings, 1/1/17202,150Supplies13,300Totals$719,750$719,750

During 2017, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2018, Abernethy reported net income of $136,750 while declaring and paying dividends of $36,000.

Assume that Chapman Company acquired Abernethy's common stock for $605,600 in cash. As of January 1, 2017, Abernethy's land had a fair value of $101,800, its buildings were valued at $227,400, and its equipment was appraised at $164,500. 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.)

rev: 09_26_2017_QC_CS-102176

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December 31, 2017Common stock - Abernethyselected answer correct

250,000selected answer correct

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Additional paid-in capitalselected answer correct

50,000selected answer correct

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Retained earnings - 1/1/17selected answer correct

202,150selected answer correct

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Investment in Abernethyselected answer correct

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502,150selected answer correct

2December 31, 2017Landselected answer correct

24,500selected answer incorrect

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Buildingsselected answer correct

31,640selected answer incorrect

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Goodwillselected answer correct

54,100selected answer incorrect

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Investment in Abernethyselected answer correct

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110,240selected answer incorrect

3December 31, 2017Equity in Subsidiary earningsselected answer correct

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Investment in Abernethyselected answer correct

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4December 31, 2017Investment in Abernethyselected answer correct

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Dividends declaredselected answer correct

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5December 31, 2017Depreciation expenseselected answer correct

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Equipmentselected answer correct

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Buildingsselected answer correct

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6December 31, 2018Common stock - Abernethyselected answer correct

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Additional paid-in capitalselected answer correct

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Retained earnings - 1/1/18selected answer correct

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Investment in Abernethyselected answer correct

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7December 31, 2018Landselected answer correct

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Buildingsselected answer correct

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Goodwillselected answer correct

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Equipmentselected answer correct

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Investment in Abernethyselected answer correct

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8December 31, 2018Equity in Subsidiary earningsselected answer correct

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Investment in Abernethyselected answer correct

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9December 31, 2018Investment in Abernethyselected answer correct

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Dividends declaredselected answer correct

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10December 31, 2018Depreciation expenseselected answer correct

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Equipmentselected answer correct

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Buildings