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Question: chapman company obtains 100 percent of abernethy companys stock on...

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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 $ 50,900
Accounts receivable $ 40,400
Additional paid-in capital 50,000
Buildings (net) (4-year remaining life) 128,000
Cash and short-term investments 68,750
Common stock 250,000
Equipment (net) (5-year remaining life) 407,500
Inventory 119,000
Land 82,000
Long-term liabilities (mature 12/31/20) 171,500
Retained earnings, 1/1/17 338,850
Supplies 15,600
Totals $ 861,250 $ 861,250

During 2017, Abernethy reported net income of $124,000 while declaring and paying dividends of $16,000. During 2018, Abernethy reported net income of $164,750 while declaring and paying dividends of $60,000.

Assume that Chapman Company acquired Abernethy’s common stock for $756,500 in cash. As of January 1, 2017, Abernethy’s land had a fair value of $93,100, its buildings were valued at $194,800, and its equipment was appraised at $366,250. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018

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