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 Accounts receivable 55,100 44,700 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 163,000 Cash and short-term investments 83,750 Common stock 250,000 Equipment (net) (5-year remaining life) 207,500 Inventory 122,000 Land 85,500 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies 162,500 202,150 Totals $ 13,300 719,750 $ 719,750 During 2020, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2021, 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, 2020, 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, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries 1 2 3 4 5 6 7 8 12 > Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.
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 Accounts receivable 55,100 44,700 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 163,000 Cash and short-term investments 83,750 Common stock 250,000 Equipment (net) (5-year remaining life) 207,500 Inventory 122,000 Land 85,500 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies 162,500 202,150 Totals $ 13,300 719,750 $ 719,750 During 2020, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2021, 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, 2020, 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, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries 1 2 3 4 5 6 7 8 12 > Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1MC
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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:
Debit
Credit
Accounts payable
Accounts receivable
55,100
44,700
Additional paid-in capital
50,000
Buildings (net) (4-year remaining life)
163,000
Cash and short-term investments
83,750
Common stock
250,000
Equipment (net) (5-year remaining life)
207,500
Inventory
122,000
Land
85,500
Long-term liabilities (mature 12/31/23)
Retained earnings, 1/1/20
Supplies
162,500
202,150
Totals
$
13,300
719,750 $
719,750
During 2020, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2021, 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, 2020, 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, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the
first account field.)
view transaction list
Consolidation
Worksheet Entries
1
2
3
4 5 6 7 8
12
>
Prepare entry *C to convert parent's beginning retained earnings to full
accrual basis.
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