In: Accounting
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 | $ | 52,400 | |||
Accounts receivable | $ | 48,600 | |||
Additional paid-in capital | 50,000 | ||||
Buildings (net) (4-year life) | 179,000 | ||||
Cash and short-term investments | 61,250 | ||||
Common stock | 250,000 | ||||
Equipment (net) (5-year life) | 260,000 | ||||
Inventory | 121,500 | ||||
Land | 105,000 | ||||
Long-term liabilities (mature 12/31/17) | 174,500 | ||||
Retained earnings, 1/1/14 | 264,650 | ||||
Supplies | 16,200 | ||||
Totals | $ | 791,550 | $ | 791,550 | |
During 2014, Abernethy reported net income of $86,000 while declaring and paying dividends of $11,000. During 2015, Abernethy reported net income of $124,500 while declaring and paying dividends of $47,000. |
Assume that Chapman Company acquired Abernethy’s common stock for $675,160 in cash. Assume that the equipment and long-term liabilities had fair values of $284,350 and $142,140, respectively, on the acquisition date. Chapman uses the initial value 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.) |