chapman company obtains 100 percent
| Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2014. As of that date, Abernethy has the following trial balance: |
| Debit | Credit | ||||
| Accounts payable | $ | 52,800 | |||
| Accounts receivable | $ | 49,500 | |||
| Additional paid-in capital | 50,000 | ||||
| Buildings (net) (4-year life) | 174,000 | ||||
| Cash and short-term investments | 84,000 | ||||
| Common stock | 250,000 | ||||
| Equipment (net) (5-year life) | 315,000 | ||||
| Inventory | 137,500 | ||||
| Land | 90,500 | ||||
| Long-term liabilities (mature 12/31/17) | 188,500 | ||||
| Retained earnings, 1/1/14 | 323,600 | ||||
| Supplies | 14,400 | ||||
| Totals | $ | 864,900 | $ | 864,900 | |
| During 2014, Abernethy reported net income of $129,000 while declaring and paying dividends of $16,000. During 2015, Abernethy reported net income of $176,000 while declaring and paying dividends of $38,000. |
| Assume that Chapman Company acquired Abernethy’s common stock by paying $768,600 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. |
| Prepare consolidation worksheet entries for December 31, 2014, and December 31, 2015. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.) |
chapman company obtains 100 percent of abernethy
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Question & Answer: As of that date, Abernethy has the following trial balance:…..
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