Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2023. As of that date, Abernethy has the following trial balance: Items 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 12/31/26) - 178,500 Retained earnings, 1/1/23 - 358,800 Supplies 11,400 - Totals $ 891,400 $ 891,400 During 2023, Abernethy reported net income of $126,000 while declaring and paying dividends of $16,000. During 2024, 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 $765,230 in cash. Assume that the equipment and long-term liabilities had fair values of $458,150 and $145,220, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment. Required: Prepare consolidation worksheet entries for December 31, 2023, and December 31, 2024.
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2023. As of that date, Abernethy has the following trial balance: Items 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 12/31/26) - 178,500 Retained earnings, 1/1/23 - 358,800 Supplies 11,400 - Totals $ 891,400 $ 891,400 During 2023, Abernethy reported net income of $126,000 while declaring and paying dividends of $16,000. During 2024, 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 $765,230 in cash. Assume that the equipment and long-term liabilities had fair values of $458,150 and $145,220, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment. Required: Prepare consolidation worksheet entries for December 31, 2023, and December 31, 2024.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2023. As of that date, Abernethy has the following
| Items | 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 12/31/26) | - | 178,500 |
| - | 358,800 | |
| Supplies | 11,400 | - |
| Totals | $ 891,400 | $ 891,400 |
During 2023, Abernethy reported net income of $126,000 while declaring and paying dividends of $16,000. During 2024, 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 $765,230 in cash. Assume that the equipment and long-term liabilities had fair values of $458,150 and $145,220, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment.
Required:
Prepare consolidation worksheet entries for December 31, 2023, and December 31, 2024.
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