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 $ 42,500 209,000 67,250 357,500 136,000 114,000 - 12,700 $938,950 Credit $ 55,800 50,000 - 250,000 168,500 414,650 $ 938,950 During 2023, Abernethy reported net income of $104,500 while declaring and paying dividends of $13,000. During 2024, Abernethy reported net income of $137,750 while declaring and paying dividends of $34,000. Assume that Chapman Company acquired Abernethy's common stock for $819,720 in cash. Assume that the equipment and long-term liabilities had fair values of $378,350 and $137,980, 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. 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 $ 42,500 209,000 67,250 357,500 136,000 114,000 - 12,700 $938,950 Credit $ 55,800 50,000 - 250,000 168,500 414,650 $ 938,950 During 2023, Abernethy reported net income of $104,500 while declaring and paying dividends of $13,000. During 2024, Abernethy reported net income of $137,750 while declaring and paying dividends of $34,000. Assume that Chapman Company acquired Abernethy's common stock for $819,720 in cash. Assume that the equipment and long-term liabilities had fair values of $378,350 and $137,980, 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. 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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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
$ 42,500
209,000
67,250
357,500
136,000
114,000
-
12,700
$938,950
Credit
$ 55,800
50,000
-
250,000
168,500
414,650
$ 938,950
During 2023, Abernethy reported net income of $104,500 while declaring and paying dividends of $13,000. During 2024, Abernethy
reported net income of $137,750 while declaring and paying dividends of $34,000.
Assume that Chapman Company acquired Abernethy's common stock for $819,720 in cash. Assume that the equipment and long-term
liabilities had fair values of $378,350 and $137,980, 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.
Note: If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.
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