Problem 3-19 (Algo) (LO 3-3a) Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. 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 12/31/23) Retained earnings, 1/1/20 Supplies Totals Debit $ 48,208 161,000 81,750 242,500 135,500. 129,500 16,700 $815,150 Credit $ 50,800 50,000 250,000 167,000 297,358 $ 815,150 During 2020, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000. During 2021, Abernethy reported net income of $134,750 while declaring and paying dividends of $34,000 Assume that Chapman Company acquired Abernethy's common stock for $694,850 in cash. As of January 1, 2020, Abernethy's land had a fair value of $140,700, its buildings were valued at $201,800, and its equipment was appraised at $217,250. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Problem 3-19 (Algo) (LO 3-3a) Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. 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 12/31/23) Retained earnings, 1/1/20 Supplies Totals Debit $ 48,208 161,000 81,750 242,500 135,500. 129,500 16,700 $815,150 Credit $ 50,800 50,000 250,000 167,000 297,358 $ 815,150 During 2020, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000. During 2021, Abernethy reported net income of $134,750 while declaring and paying dividends of $34,000 Assume that Chapman Company acquired Abernethy's common stock for $694,850 in cash. As of January 1, 2020, Abernethy's land had a fair value of $140,700, its buildings were valued at $201,800, and its equipment was appraised at $217,250. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (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:Problem 3-19 (Algo) (LO 3-3a)
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. 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 12/31/23).
Retained earnings, 1/1/20
Supplies
A
Totals
Debit
$ 48,208
161,000
81,750
242,500
135,500
129,500
16,700
$815,150
Credit
$ 50,800
50,000
250,000
167,000
297,350
$ 815,150
During 2020, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000. During 2021, Abernethy
reported net income of $134,750 while declaring and paying dividends of $34,000.
Assume that Chapman Company acquired Abernethy's common stock for $694,850 in cash. As of January 1, 2020, Abernethy's land
had a fair value of $140,700, its buildings were valued at $201,800, and its equipment was appraised at $217,250. Chapman uses the
equity method for this investment.
Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
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