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 - $ 56,400 Accounts receivable $ 43,900 - Additional paid-in capital - 50,000 Buildings (net) (4-year remaining life) 217,000 - Cash and short-term investments 76,750 - Common stock - 250,000 Equipment (net) (5-year remaining life) 367,500 - Inventory 96,500 - Land 122,000 - Long-term liabilities (mature 12/31/26) - 182,500 Retained earnings, 1/1/23 - 396,250 Supplies 11,500 - Totals $ 935,150 $ 935,150 During 2023, Abernethy reported net income of $103,500 while declaring and paying dividends of $13,000. During 2024, Abernethy reported net income of $145,250 while declaring and paying dividends of $47,000. Assume that Chapman Company acquired Abernethy’s common stock for $793,300 in cash. As of January 1, 2023, Abernethy’s land had a fair value of $134,000, its buildings were valued at $267,800, and its equipment was appraised at $336,250. Chapman uses the equity method for this 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 - $ 56,400 Accounts receivable $ 43,900 - Additional paid-in capital - 50,000 Buildings (net) (4-year remaining life) 217,000 - Cash and short-term investments 76,750 - Common stock - 250,000 Equipment (net) (5-year remaining life) 367,500 - Inventory 96,500 - Land 122,000 - Long-term liabilities (mature 12/31/26) - 182,500 Retained earnings, 1/1/23 - 396,250 Supplies 11,500 - Totals $ 935,150 $ 935,150 During 2023, Abernethy reported net income of $103,500 while declaring and paying dividends of $13,000. During 2024, Abernethy reported net income of $145,250 while declaring and paying dividends of $47,000. Assume that Chapman Company acquired Abernethy’s common stock for $793,300 in cash. As of January 1, 2023, Abernethy’s land had a fair value of $134,000, its buildings were valued at $267,800, and its equipment was appraised at $336,250. Chapman uses the equity method for this 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 | - | $ 56,400 |
| $ 43,900 | - | |
| Additional paid-in capital | - | 50,000 |
| Buildings (net) (4-year remaining life) | 217,000 | - |
| Cash and short-term investments | 76,750 | - |
| Common stock | - | 250,000 |
| Equipment (net) (5-year remaining life) | 367,500 | - |
| Inventory | 96,500 | - |
| Land | 122,000 | - |
| Long-term liabilities (mature 12/31/26) | - | 182,500 |
| - | 396,250 | |
| Supplies | 11,500 | - |
| Totals | $ 935,150 | $ 935,150 |
During 2023, Abernethy reported net income of $103,500 while declaring and paying dividends of $13,000. During 2024, Abernethy reported net income of $145,250 while declaring and paying dividends of $47,000.
Assume that Chapman Company acquired Abernethy’s common stock for $793,300 in cash. As of January 1, 2023, Abernethy’s land had a fair value of $134,000, its buildings were valued at $267,800, and its equipment was appraised at $336,250. Chapman uses the equity method for this investment.
Required:
Prepare consolidation worksheet entries for December 31, 2023, and December 31, 2024.
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