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 Debit Accounts payable Accounts receivable Credit $ 56,700 $ 43,800 Cash and short-term investments Additional paid-in capital Buildings (net) (4-year remaining life) Common stock 50,000 143,000 80,250 250,000 Equipment (net) (5-year remaining life) Inventory 295,000 110,500 Land 112,000 Long-term liabilities (mature 12/31/26) Retained earnings, 1/1/23 171,000 268,750 Supplies 11,900 Totals $ 796,450 $ 796,450 During 2023, Abernethy reported net income of $122,500 while declaring and paying dividends of $15,000. During 2024, Abernethy reported net income of $159,250 while declaring and paying dividends of $49,000. Assume that Chapman Company acquired Abernethy's common stock by paying $744,750 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, 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: Items Debit Accounts payable Accounts receivable Credit $ 56,700 $ 43,800 Cash and short-term investments Additional paid-in capital Buildings (net) (4-year remaining life) Common stock 50,000 143,000 80,250 250,000 Equipment (net) (5-year remaining life) Inventory 295,000 110,500 Land 112,000 Long-term liabilities (mature 12/31/26) Retained earnings, 1/1/23 171,000 268,750 Supplies 11,900 Totals $ 796,450 $ 796,450 During 2023, Abernethy reported net income of $122,500 while declaring and paying dividends of $15,000. During 2024, Abernethy reported net income of $159,250 while declaring and paying dividends of $49,000. Assume that Chapman Company acquired Abernethy's common stock by paying $744,750 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, 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Debit
Accounts payable
Accounts receivable
Credit
$ 56,700
$ 43,800
Cash and short-term investments
Additional paid-in capital
Buildings (net) (4-year remaining life)
Common stock
50,000
143,000
80,250
250,000
Equipment (net) (5-year remaining life)
Inventory
295,000
110,500
Land
112,000
Long-term liabilities (mature 12/31/26)
Retained earnings, 1/1/23
171,000
268,750
Supplies
11,900
Totals
$ 796,450
$ 796,450
During 2023, Abernethy reported net income of $122,500 while declaring and paying dividends of $15,000. During 2024, Abernethy
reported net income of $159,250 while declaring and paying dividends of $49,000.
Assume that Chapman Company acquired Abernethy's common stock by paying $744,750 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, 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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