Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2023. As of that date, Abernethy has the following trial balance: Accounts payable Accounts receivable Items 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 12/31/26) Retained earnings, 1/1/23 Supplies Totals Debit $ 42,200 214,000 82,250 375,000 90,500 117,000 16,000 $936,950 Credit $57,300 50,000 250,000 170,000 409,650 $936,950 During 2023, Abernethy reported net income of $117,500 while declaring and paying dividends of $15,000. During 2024, Abernethy reported net income of $171,250 while declaring and paying dividends of $55,000. Assume that Chapman Company acquired Abernethy's common stock by paying $876,650 in cash. All of Abernethy's accounts are estimated to have a fair value approximately equal to present book values. Chapman uses the partial equity method to account for its investment. Required: Prepare the consolidation worksheet entries for December 31, 2023, and December 31, 2024. Note: 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, 2023. As of that date, Abernethy has the following trial balance: Accounts payable Accounts receivable Items 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 12/31/26) Retained earnings, 1/1/23 Supplies Totals Debit $ 42,200 214,000 82,250 375,000 90,500 117,000 16,000 $936,950 Credit $57,300 50,000 250,000 170,000 409,650 $936,950 During 2023, Abernethy reported net income of $117,500 while declaring and paying dividends of $15,000. During 2024, Abernethy reported net income of $171,250 while declaring and paying dividends of $55,000. Assume that Chapman Company acquired Abernethy's common stock by paying $876,650 in cash. All of Abernethy's accounts are estimated to have a fair value approximately equal to present book values. Chapman uses the partial equity method to account for its investment. Required: Prepare the consolidation worksheet entries for December 31, 2023, and December 31, 2024. Note: 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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Vishnu
Transcribed Image Text:Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2023. As of that date, Abernethy has the
following trial balance:
Accounts payable
Accounts receivable
Items
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 12/31/26)
Retained earnings, 1/1/23
Supplies
Totals
Debit
$ 42,200
214,000
82,250
375,000
90,500
117,000
16,000
$936,950
Credit
$ 57,300
50,000
250,000
170,000
409,650
$ 936,950
During 2023, Abernethy reported net income of $117,500 while declaring and paying dividends of $15,000. During 2024, Abernethy
reported net income of $171,250 while declaring and paying dividends of $55,000.
Assume that Chapman Company acquired Abernethy's common stock by paying $876,650 in cash. All of Abernethy's accounts are
estimated to have a fair value approximately equal to present book values. Chapman uses the partial equity method to account for its
investment.
Required:
Prepare the consolidation worksheet entries for December 31, 2023, and December 31, 2024.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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