Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2023. As of that date, Abernethy has the following trial balance: Accounts payable Accounts receivable Items Additional paid-in capital. Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory Land Long-term liabilities (mature 12/31/26) Retained earnings, 1/1/23 Supplies Totals Debit $ 48,200 161,000 81,750 242,500 135,500 129,500 16,700 $ 815, 150 Credit $ 50,800 50,000 250,000 167,000 297,350 $815, 150 During 2023, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000. During 2024, Abernethy reported net income of $134,750 while declaring and paying dividends of $34,000. Assume that Chapman Company acquired Abernethy's common stock for $694,850 in cash. As of January 1, 2023, Abernethy's land had a fair value of $140,700, its buildings were valued at $201,800, and its equipment was appraised at $217,250. Chapman uses the equity method for this investment. Required: Prepare consolidation worksheet entries for December 31, 2023, and December 31, 2024. Note: 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 Company's stock on January 1, 2023. As of that date, Abernethy has the following trial balance: Accounts payable Accounts receivable Items Additional paid-in capital. Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory Land Long-term liabilities (mature 12/31/26) Retained earnings, 1/1/23 Supplies Totals Debit $ 48,200 161,000 81,750 242,500 135,500 129,500 16,700 $ 815, 150 Credit $ 50,800 50,000 250,000 167,000 297,350 $815, 150 During 2023, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000. During 2024, Abernethy reported net income of $134,750 while declaring and paying dividends of $34,000. Assume that Chapman Company acquired Abernethy's common stock for $694,850 in cash. As of January 1, 2023, Abernethy's land had a fair value of $140,700, its buildings were valued at $201,800, and its equipment was appraised at $217,250. Chapman uses the equity method for this investment. Required: Prepare consolidation worksheet entries for December 31, 2023, and December 31, 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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A-3
Transcribed Image Text:Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2023. As of that date, Abernethy has the
following trial balance:
Items
Accounts payable
Accounts receivable
Additional paid-in capital.
Buildings (net) (4-year remaining life)
Cash and short-term investments
Common stock
Equipment (net) (5-year remaining life)
Inventory
Land
Long-term liabilities (mature 12/31/26)
Retained earnings, 1/1/23
Supplies
Totals
Debit
$ 48,200
161,000
81,750
242,500
135,500
129,500
16,700
$ 815, 150
Credit
$ 50,800
50,000
250,000
167,000
297,350
$815, 150
During 2023, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000. During 2024, Abernethy
reported net income of $134,750 while declaring and paying dividends of $34,000.
Assume that Chapman Company acquired Abernethy's common stock for $694,850 in cash. As of January 1, 2023, Abernethy's land
had a fair value of $140,700, its buildings were valued at $201,800, and its equipment was appraised at $217,250. Chapman uses the
equity method for this investment.
Required:
Prepare consolidation worksheet entries for December 31, 2023, and December 31, 2024.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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