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 $ 54,100 Accounts receivable $ 48,500 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 130,000 Cash and short-term investments 66,000 Common stock 250,000 Equipment (net) (5-year remaining life) 437,500 Inventory 109,000 Land 89,000 Long-term liabilities (mature 12/31/23) 178,500 Retained earnings, 1/1/20 358,800 Supplies 11,400 Totals $ 891,400 $ 891,400 During 2020, Abernethy reported net income of $126,000 while declaring and paying dividends of $16,000. During 2021, Abernethy reported net income of $174,000 while declaring and paying dividends of $49,000. Assume that Chapman Company acquired Abernethy’s common stock for $773,550 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $104,200, its buildings were valued at $208,800, and its equipment was appraised at $396,500. 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
Debit | Credit | ||||
Accounts payable | $ | 54,100 | |||
$ | 48,500 | ||||
Additional paid-in capital | 50,000 | ||||
Buildings (net) (4-year remaining life) | 130,000 | ||||
Cash and short-term investments | 66,000 | ||||
Common stock | 250,000 | ||||
Equipment (net) (5-year remaining life) | 437,500 | ||||
Inventory | 109,000 | ||||
Land | 89,000 | ||||
Long-term liabilities (mature 12/31/23) | 178,500 | ||||
358,800 | |||||
Supplies | 11,400 | ||||
Totals | $ | 891,400 | $ | 891,400 | |
During 2020, Abernethy reported net income of $126,000 while declaring and paying dividends of $16,000. During 2021, Abernethy reported net income of $174,000 while declaring and paying dividends of $49,000.
Assume that Chapman Company acquired Abernethy’s common stock for $773,550 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $104,200, its buildings were valued at $208,800, and its equipment was appraised at $396,500. 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
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