Business, 07.07.2021 15:10 jennychen2518pbmirn

Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1,2012. As of that date, Abernethy has the following trial balance: Debit Credit
Accounts payable $ 50,000
Accounts receivable $ 40,000
Additional paid-in capital 50,000
Buildings (net) (4-year life) 120,000
Cash and short-term investments 60,000
Common stock 250,000
Equipment (net) (5-year life) 200,000
Inventory 90,000
Land 80,000
Long-term liabilities (mature 12/31/15) 150,000
Retained earnings, 1/1/12 100,000
Supplies 10,000
Totals $ 600,000 $ 600,000
During 2012, Abernethy reported income of $80,000 while paying dividends of $10,000. During 2013, Abernethy reported income of $110,000 while paying dividends of $30,000.
Assume that Chapman Company acquired Abernethy’s common stock for $490,000 in cash. As of January 1,2012, Abernethy’s land had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. Chapman uses the equity method for this investment.
Prepare consolidation worksheet entries for December 31, 2012, and December 31,2013.

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Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1,2012. As of that date,...

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