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 $43,700 123,000 80,500 270,000 138,500 118,500 Credit $ 59,900 50,000 250,000 175,000 257,100 17,800 $ 792,000 $ 792,000 During 2023, Abernethy reported net income of $112,000 while declaring and paying dividends of $14,000. During 2024, Abernethy reported net income of $163,250 while declaring and paying dividends of $54,000. Assume that Chapman Company acquired Abernethy's common stock for $651,550 in cash. As of January 1, 2023, Abernethy's land had a fair value of $132,100, its buildings were valued at $166,600, and its equipment was appraised at $242,750. Chapman uses the equity method for this 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 $43,700 123,000 80,500 270,000 138,500 118,500 Credit $ 59,900 50,000 250,000 175,000 257,100 17,800 $ 792,000 $ 792,000 During 2023, Abernethy reported net income of $112,000 while declaring and paying dividends of $14,000. During 2024, Abernethy reported net income of $163,250 while declaring and paying dividends of $54,000. Assume that Chapman Company acquired Abernethy's common stock for $651,550 in cash. As of January 1, 2023, Abernethy's land had a fair value of $132,100, its buildings were valued at $166,600, and its equipment was appraised at $242,750. Chapman uses the equity method for this 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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Munabhai
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:
Items
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
Debit
$ 43,700
123,000
80,500
270,000
138,500
118,500
Credit
$ 59,900
50,000
250,000
175,000
257,100
17,800
$ 792,000 $ 792,000
During 2023, Abernethy reported net income of $112,000 while declaring and paying dividends of $14,000. During 2024, Abernethy
reported net income of $163,250 while declaring and paying dividends of $54,000.
Assume that Chapman Company acquired Abernethy's common stock for $651,550 in cash. As of January 1, 2023, Abernethy's land
had a fair value of $132,100, its buildings were valued at $166,600, and its equipment was appraised at $242,750. Chapman uses the
equity method for this 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.
21
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