hapman 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 |
|
|
|
$ |
56,700 |
Accounts receivable |
$ |
43,800 |
|
|
|
Additional paid-in capital |
|
|
|
|
50,000 |
Buildings (net) (4-year remaining life) |
|
143,000 |
|
|
|
Cash and short-term investments |
|
80,250 |
|
|
|
Common stock |
|
|
|
|
250,000 |
Equipment (net) (5-year remaining life) |
|
295,000 |
|
|
|
Inventory |
|
110,500 |
|
|
|
Land |
|
112,000 |
|
|
|
Long-term liabilities (mature 12/31/23) |
|
|
|
|
171,000 |
Retained earnings, 1/1/20 |
|
|
|
|
268,750 |
Supplies |
|
11,900 |
|
|
|
Totals |
$ |
796,450 |
|
$ |
796,450 |
|
During 2020, Abernethy reported net income of $122,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $159,250 while declaring and paying dividends of $49,000.
Assume that Chapman Company acquired Abernethy’s common stock for $698,050 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $123,900, its buildings were valued at $219,400, and its equipment was appraised at $254,500. Chapman uses the equity method for this investment.
Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021.(