Question
In: Accounting
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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 | $ | 50,000 | |||
| Accounts receivable | $ | 40,000 | |||
| Additional paid-in capital | 50,000 | ||||
| Buildings (net) (4-year remaining life) | 120,000 | ||||
| Cash and short-term investments | 60,000 | ||||
| Common stock | 250,000 | ||||
| Equipment (net) (5-year remaining life) | 200,000 | ||||
| Inventory | 90,000 | ||||
| Land | 80,000 | ||||
| Long-term liabilities (mature 12/31/20) | 150,000 | ||||
| Retained earnings, 1/1/17 | 100,000 | ||||
| Supplies | 10,000 | ||||
| Totals | $ | 600,000 | $ | 600,000 | |
During 2017, Abernethy reported net income of $80,000 while declaring and paying dividends of $10,000. During 2018, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000.
Assume that Chapman Company acquired Abernethy’s common stock for $490,000 in cash. As of January 1, 2017, 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, 2017, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
Chapman Company obtains 100 percent of Abernethy Company’s stock
on January 1, 2017. As of that date, Abernethy has the following
trial balance:DebitCreditAccounts payable$53,700Accounts
receivable$41,000Additional paid-in capital50,000Buildings (net)
(4-year remaining life)184,000Cash and short-term
investments77,250Common stock250,000Equipment (net) (5-year
remaining life)400,000Inventory117,500Land107,500Long-term
liabilities (mature 12/31/20)173,000Retained earnings,
1/1/17417,450Supplies16,900Totals$944,150$944,150During 2017,
Abernethy reported net income of $98,000 while declaring and paying
dividends of $12,000. During 2018, Abernethy reported net income of
$128,250 while declaring and paying dividends of $39,000.Assume
that Chapman Company acquired Abernethy’s common stock...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
Chapman Company obtains 100 percent of Abernethy Company’s stock
on January 1, 2017. As of that date, Abernethy has the following
trial balance:DebitCreditAccounts payable$55,100Accounts
receivable$44,700Additional paid-in capital50,000Buildings (net)
(4-year remaining life)163,000Cash and short-term
investments83,750Common stock250,000Equipment (net) (5-year
remaining life)207,500Inventory122,000Land85,500Long-term
liabilities (mature 12/31/20)162,500Retained earnings,
1/1/17202,150Supplies13,300Totals$719,750$719,750During 2017,
Abernethy reported net income of $105,000 while declaring and
paying dividends of $13,000. During 2018, Abernethy reported net
income of $136,750 while declaring and paying dividends of
$36,000.Assume that Chapman Company acquired Abernethy’s common
stock...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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
$
59,500
Accounts receivable
$
46,600
Additional paid-in capital
50,000
Buildings (net) (4-year remaining life)
145,000
Cash and short-term investments
84,250
Common stock
250,000
Equipment (net) (5-year remaining life)
257,500
Inventory
106,000
Land
129,000
Long-term liabilities (mature 12/31/20)
151,000
Retained earnings, 1/1/17
273,050
Supplies
15,200
Totals
$
783,550
$
783,550
During 2017, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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
$
58,000
Accounts receivable
$
40,200
Additional paid-in capital
50,000
Buildings (net) (4-year remaining life)
170,000
Cash and short-term investments
66,750
Common stock
250,000
Equipment (net) (5-year remaining life)
372,500
Inventory
109,500
Land
116,000
Long-term liabilities (mature 12/31/20)
165,000
Retained earnings, 1/1/17
369,150
Supplies
17,200
Totals
$
892,150
$
892,150
During
2017, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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
$
54,100
Accounts receivable
$
48,500
Additional paid-in capital
50,000
Buildings (net) (4-year remaining life)
130,000
Cash and short-term investments
66,000
Common stock
250,000
Equipment (net) (5-year remaining life)
437,500
Inventory
109,000
Land
89,000
Long-term liabilities (mature 12/31/20)
178,500
Retained earnings, 1/1/17
358,800
Supplies
11,400
Totals
$
891,400
$
891,400
During 2017, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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
$
56,400
Accounts receivable
$
43,900
Additional paid-in capital
50,000
Buildings (net) (4-year
remaining life)
217,000
Cash and short-term
investments
76,750
Common stock
250,000
Equipment (net) (5-year
remaining life)
367,500
Inventory
96,500
Land
122,000
Long-term liabilities (mature
12/31/20)
182,500
Retained earnings, 1/1/17
396,250
Supplies
11,500
Totals
$
935,150
$
935,150
During 2017, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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
$
57,600
Accounts receivable
$
40,600
Additional paid-in capital
50,000
Buildings (net) (4-year
remaining life)
126,000
Cash and short-term
investments
65,750
Common stock
250,000
Equipment (net) (5-year
remaining life)
390,000
Inventory
100,000
Land
110,000
Long-term liabilities (mature
12/31/20)
187,500
Retained earnings, 1/1/17
306,850
Supplies
19,600
Totals
$
851,950
$
851,950
During 2017, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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
$
50,000
Accounts receivable
$
40,000
Additional paid-in capital
50,000
Buildings (net) (4-year remaining life)
120,000
Cash and short-term investments
60,000
Common stock
250,000
Equipment (net) (5-year remaining life)
200,000
Inventory
90,000
Land
80,000
Long-term liabilities (mature 12/31/20)
150,000
Retained earnings, 1/1/17
100,000
Supplies
10,000
Totals
$
600,000
$
600,000
During 2017, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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
$
53,700
Accounts receivable
$
41,000
Additional paid-in capital
50,000
Buildings (net) (4-year remaining life)
184,000
Cash and short-term investments
77,250
Common stock
250,000
Equipment (net) (5-year remaining life)
400,000
Inventory
117,500
Land
107,500
Long-term liabilities (mature 12/31/20)
173,000
Retained earnings, 1/1/17
417,450
Supplies
16,900
Totals
$
944,150
$
944,150
During 2017, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...
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
$
50,300
Accounts receivable
$
47,500
Additional paid-in capital
50,000
Buildings (net) (4-year remaining life)
201,000
Cash and short-term investments
61,750
Common stock
250,000
Equipment (net) (5-year remaining life)
447,500
Inventory
127,500
Land
124,000
Long-term liabilities (mature 12/31/20)
162,000
Retained earnings, 1/1/17
514,850
Supplies
17,900
Totals
$
1,027,150
$
1,027,150
During 2017, Abernethy...
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