Business, 03.06.2021 01:00 jjxt126

Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit
Accounts payable $57,700
Accounts receivable $45,000
Additional paid-in capital 50,000
Buildings (net) (4-year remaining life) 124,000
Cash and short-term investments 68,250
Common stock 250,000
Equipment (net) (5-year remaining life) 327,500
Inventory 103,000
Land 106,000
Long-term liabilities (mature 12/31/23) 183,500
Retained earnings, 1/1/20 252,350
Supplies 19,800
Totals $793,550 $793,550

During 2020, Abernethy reported net income of $101,000 while declaring and paying dividends of $13,000.
During 2021, Abernethy reported net income of $152,000 while declaring and paying dividends of $39,000.

Assume that Chapman Company acquired Abernethy’s common stock for $664,740 in cash. Assume that the equipment and long-term liabilities had fair values of $349,250 and $151,060, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment.

Required:
Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021

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Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date...

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