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 $ 54,200 Accounts payable $ 42,900 Accounts receivable 50,000 Additional paid-in capital 192, 000 Buildings (net) (4-year remaining life) 73,500 Cash and short-term investments 250, 000 Common stock 245, 000 Equipment (net) (5-year remaining life) 99,000 Inventory 128,500 Land 160, 000 Long-term liabilities (mature 12/31/23) 279,200 Retained earnings, 1/1/20 Supplies 12,500 Totals $793,400 $ 793,400 During 2020, Abernethy reported net income of $120,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $172,000 while declaring and paying dividends of $40,000. Assume that Chapman Company acquired Abernethy's common stock for $714,650 in cash. As of January 1, 2020, Abernethy's land had a fair value of $139,200, its buildings were valued at $262,000, and its equipment was appraised at $218,000. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1,
2020. As of that date, Abernethy has the following
|
|
Debit |
Credit $ 54,200 |
|
Accounts payable |
$ 42,900 |
|
|
Accounts receivable |
|
50,000 |
|
Additional paid-in capital |
192, 000 |
|
|
Buildings (net) (4-year remaining life) |
73,500 |
|
|
Cash and short-term investments |
|
250, 000 |
|
Common stock |
245, 000 |
|
|
Equipment (net) (5-year remaining life) |
99,000 |
|
|
Inventory |
128,500 |
|
|
Land |
|
160, 000 |
|
Long-term liabilities (mature 12/31/23) |
|
279,200 |
|
|
|
|
|
Supplies |
12,500 |
|
|
Totals |
$793,400 |
$ 793,400 |
During 2020, Abernethy reported net income of $120,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $172,000 while declaring and paying dividends of $40,000.
Assume that Chapman Company acquired Abernethy's common stock for $714,650 in cash. As of January 1, 2020, Abernethy's land had a fair value of $139,200, its buildings were valued at $262,000, and its equipment was appraised at $218,000.
Chapman uses the equity method for this investment.
Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021
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