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 entru
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 entru
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
Related questions
Question
nku.5
![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
$ 40,600
126,000
65,750
390,000
100,000
110,000
19,600
$ 851,950
Credit
$ 57,600
50,000
250,000
187,500
306,850
$ 851,950
During 2023, Abernethy reported net income of $108,500 while declaring and paying dividends of $14,000. During 2024, Abernethy
reported net income of $139,750 while declaring and paying dividends of $54,000.
Assume that Chapman Company acquired Abernethy's common stock for $711,320 in cash. Assume that the equipment and long-term
liabilities had fair values of $411,450 and $155,580, 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F758ceac8-a23b-4994-a4f9-0a8981bbfa2b%2F326c8a3b-0795-4e5c-9e83-6deaaf9a6274%2Fsfavpq_processed.jpeg&w=3840&q=75)
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
$ 40,600
126,000
65,750
390,000
100,000
110,000
19,600
$ 851,950
Credit
$ 57,600
50,000
250,000
187,500
306,850
$ 851,950
During 2023, Abernethy reported net income of $108,500 while declaring and paying dividends of $14,000. During 2024, Abernethy
reported net income of $139,750 while declaring and paying dividends of $54,000.
Assume that Chapman Company acquired Abernethy's common stock for $711,320 in cash. Assume that the equipment and long-term
liabilities had fair values of $411,450 and $155,580, 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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