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 Debit $ 43,100 175,000 75,500 439,500 127,000 116,500 Credit $ 51,900 50,000 250,000 170,500 464.900
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 Debit $ 43,100 175,000 75,500 439,500 127,000 116,500 Credit $ 51,900 50,000 250,000 170,500 464.900
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
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
view transaction list
Items
Consolidation
Worksheet Entries
1
2
During 2023, Abernethy reported net income of $87,000 while declaring and paying dividends of $11,000. During 2024, Abernethy
reported net income of $122,500 while declaring and paying dividends of $55,000.
Date
Assume that Chapman Company acquired Abernethy's common stock for $873,250 In cash. As of January 1, 2023, Abernethy's land
had a fair value of $129,800, its buildings were valued at $243,800, and its equipment was appralsed at $403,750. Chapman uses the
equity method for this Investment.
Note: Enter debits before credits.
Record entry
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.
3
December 31, 2023
5
Debit
6
Clear entry
$ 43,100
175,000
75,500
439,500
127,000
116,500
7
Accounts
10,700
$ 987,300
Credit
$ 51,900
50,000
250,000
170,500
464,900
Prepare entry *C to convert parent's beginning retained earnings to full accrual
basis.
$ 987,300
8 .. 12
Debit
Credit
view consolidation entries
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