Reference no: EM132636949
Question - 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 $55,800
Accounts receivable $42,500
Additional paid-in capital 50,000
Buildings (net) (4-year remaining life) 209,000
Cash and short-term investments 67,250
Common stock 250,000
Equipment (net) (5-year remaining life) 357,500
Inventory 136,000
Land 114,000
Long-term liabilities (mature 12/31/20) 168,500
Retained earnings, 1/1/17 414,650
Supplies 12,700
Totals $938,950 $938,950
During 2017, Abernethy reported net income of $104,500 while declaring and paying dividends of $13,000. During 2018, Abernethy reported net income of $137,750 while declaring and paying dividends of $34,000.
Assume that Chapman Company acquired Abernethy's common stock by paying $921,650 in cash. All of Abernethy's accounts are estimated to have a fair value approximately equal to present book values. Chapman uses the partial equity method to account for its investment.
Required - Prepare the consolidation worksheet entries for December 31, 2017, and December 31, 2018.