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       $ 50,000 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 12/31/23)         150,000 Retained earnings, 1/1/20         100,000 Supplies   10,000       Totals $ 600,000   $ 600,000     During 2020, Abernethy reported net income of $80,000 while declaring and paying dividends of $10,000. During 2021, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000.   Assume that Chapman Company acquired Abernethy’s common stock for $490,000 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. 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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
100%

I need help with requirement 3, 4, 5  and 6 please (A, I, D and E).

 

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       $ 50,000
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 12/31/23)         150,000
Retained earnings, 1/1/20         100,000
Supplies   10,000      
Totals $ 600,000   $ 600,000
 

 

During 2020, Abernethy reported net income of $80,000 while declaring and paying dividends of $10,000. During 2021, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000.

 

Assume that Chapman Company acquired Abernethy’s common stock for $490,000 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. 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.)

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education