ayable $ 56,700 Accounts receivable $ 43,800 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 143,000 Cash and short-term investments 80,250 Common stock
hapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following
| Debit | Credit | ||||
| Accounts payable | $ | 56,700 | |||
| $ | 43,800 | ||||
| Additional paid-in capital | 50,000 | ||||
| Buildings (net) (4-year remaining life) | 143,000 | ||||
| Cash and short-term investments | 80,250 | ||||
| Common stock | 250,000 | ||||
| Equipment (net) (5-year remaining life) | 295,000 | ||||
| Inventory | 110,500 | ||||
| Land | 112,000 | ||||
| Long-term liabilities (mature 12/31/23) | 171,000 | ||||
| 268,750 | |||||
| Supplies | 11,900 | ||||
| Totals | $ | 796,450 | $ | 796,450 | |
During 2020, Abernethy reported net income of $122,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $159,250 while declaring and paying dividends of $49,000.
Assume that Chapman Company acquired Abernethy’s common stock for $698,050 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $123,900, its buildings were valued at $219,400, and its equipment was appraised at $254,500. Chapman uses the equity method for this investment.
Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (
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