Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that date, Abernethy has the following trial balance: Debit Credit Accounts payable $ 55,100 Accounts receivable $ 44,700 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 163,000 Cash and short-term investments 83,750 Common stock 250,000 Equipment (net) (5-year remaining life) 207,500 Inventory 122,000 Land 85,500 Long-term liabilities (mature 12/31/20) 162,500 Retained earnings, 1/1/17 202,150 Supplies 13,300 Totals $ 719,750 $ 719,750 During 2017, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2018, Abernethy reported net income of $136,750 while declaring and paying dividends of $36,000. Assume that Chapman Company acquired Abernethy’s common stock for $605,600 in cash. As of January 1, 2017, Abernethy’s land had a fair value of $101,800, its buildings were valued at $227,400, and its equipment was appraised at $164,500. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018.
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that date, Abernethy has the following
Debit | Credit | ||||
Accounts payable | $ | 55,100 | |||
Accounts receivable | $ | 44,700 | |||
Additional paid-in capital | 50,000 | ||||
Buildings (net) (4-year remaining life) | 163,000 | ||||
Cash and short-term investments | 83,750 | ||||
Common stock | 250,000 | ||||
Equipment (net) (5-year remaining life) | 207,500 | ||||
Inventory | 122,000 | ||||
Land | 85,500 | ||||
Long-term liabilities (mature 12/31/20) | 162,500 | ||||
Retained earnings, 1/1/17 | 202,150 | ||||
Supplies | 13,300 | ||||
Totals | $ | 719,750 | $ | 719,750 | |
During 2017, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2018, Abernethy reported net income of $136,750 while declaring and paying dividends of $36,000.
Assume that Chapman Company acquired Abernethy’s common stock for $605,600 in cash. As of January 1, 2017, Abernethy’s land had a fair value of $101,800, its buildings were valued at $227,400, and its equipment was appraised at $164,500. Chapman uses the equity method for this investment.
Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018.
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