Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: 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 12/31/23) Retained earnings, 1/1/20 Supplies. Totals. Debit $ 45,800 197,000 81,500 345,000 124,500 125,000 15,900 $934,700 Credit $ 55,300 50,000 250,000 176,500 402,900 $ 934,700 During 2020, Abernethy reported net income of $124,500 while declaring and paying dividends of $16,000. During 2021, Abernethy reported net income of $167,750 while declaring and paying dividends of $41,000. Assume that Chapman Company acquired Abernethy's common stock for $819,850 in cash. As of January 1, 2020, Abernethy's land had a fair value of $141,900, its buildings were valued at $251,800, and its equipment was appraised at $306,750. 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.)
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: 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 12/31/23) Retained earnings, 1/1/20 Supplies. Totals. Debit $ 45,800 197,000 81,500 345,000 124,500 125,000 15,900 $934,700 Credit $ 55,300 50,000 250,000 176,500 402,900 $ 934,700 During 2020, Abernethy reported net income of $124,500 while declaring and paying dividends of $16,000. During 2021, Abernethy reported net income of $167,750 while declaring and paying dividends of $41,000. Assume that Chapman Company acquired Abernethy's common stock for $819,850 in cash. As of January 1, 2020, Abernethy's land had a fair value of $141,900, its buildings were valued at $251,800, and its equipment was appraised at $306,750. 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
D2.
Account
Transcribed Image Text:Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the
following trial balance:
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 12/31/23)
Retained earnings, 1/1/20
Supplies
Totals
Debit
$ 45,800
197,000
81,500
345,000
124,500
125,000
15,900
$934,700
Credit
$ 55,300
50,000
250,000
176,500
402,900
$ 934,700
During 2020, Abernethy reported net income of $124,500 while declaring and paying dividends of $16,000. During 2021, Abernethy
reported net income of $167,750 while declaring and paying dividends of $41,000.
Assume that Chapman Company acquired Abernethy's common stock for $819,850 in cash. As of January 1, 2020, Abernethy's land
had a fair value of $141,900, its buildings were valued at $251,800, and its equipment was appraised at $306,750. 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.)
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