Question

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.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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 $ 58,300 Accounts receivable $ 43,500 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 210,000 Cash and short-term investments 83,250 Common stock 250,000 Equipment (net) (5-year remaining life) 417,500 Inventory 95,000 Land 103,000 Long-term liabilities (mature 12/31/20) 163,000 Retained earnings, 1/1/17 445,850 Supplies 14,900 Totals $ 967,150 $ 967,150 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 $ 51,500 Accounts receivable $ 46,500 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 190,000 Cash and short-term investments 67,750 Common stock 250,000 Equipment (net) (5-year remaining life) 442,500 Inventory 107,000 Land 93,500 Long-term liabilities (mature 12/31/20) 166,500 Retained earnings, 1/1/17 448,250 Supplies 19,000 Totals $ 966,250 $ 966,250 During 2017, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit Accounts payable $ 52,800 Accounts receivable $ 49,500 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 174,000 Cash and short-term investments 84,000 Common stock 250,000 Equipment (net) (5-year remaining life) 315,000 Inventory 137,500 Land 90,500 Long-term liabilities (mature 12/31/23) 188,500 Retained earnings, 1/1/20 323,600 Supplies 14,400 Totals $ 864,900 $ 864,900 During 2020, Abernethy...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2014. As of that...
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 $ 56,700      Accounts receivable $ 43,800   Additional paid-in capital 50,000      Buildings (net) (4-year life) 143,000   Cash and short-term investments 80,250   Common stock 250,000      Equipment (net) (5-year life) 295,000   Inventory 110,500   Land 112,000   Long-term liabilities (mature 12/31/17) 171,000      Retained earnings, 1/1/14 268,750      Supplies 11,900      Totals $ 796,450 $...
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2014. As of that...
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 $ 54,100      Accounts receivable $ 48,500   Additional paid-in capital 50,000      Buildings (net) (4-year life) 130,000   Cash and short-term investments 66,000   Common stock 250,000      Equipment (net) (5-year life) 437,500   Inventory 109,000   Land 89,000   Long-term liabilities (mature 12/31/17) 178,500      Retained earnings, 1/1/14 358,800      Supplies 11,400      Totals $ 891,400 $...
PAM Co. acquired all of the common stock of Sista Co. on January 1, 2017. As...
PAM Co. acquired all of the common stock of Sista Co. on January 1, 2017. As of that date, Sista had the following trial balance: Debit Credit Accounts payable $ 60,000 Accounts receivable $ 50,000 Additional paid-in capital 60,000 Buildings (net) (20-year life) 140,000 Cash and short-term investments 70,000 Common stock 300,000 Equipment (net) (8-year life) 240,000 Intangible assets (indefinite life) 110,000 Land 90,000 Long-term liabilities (mature 12/31/19) 180,000 Retained earnings, 1/1/17 120,000 Supplies 20,000 Totals $ 720,000 $ 720,000...
Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing...
Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 10,100 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner reported a net book value of $108,900. However, its equipment (with a five-year remaining life) was undervalued by $5,600 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $37,000, although no value had been recorded...
Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing...
Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 9,800 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner reported a net book value of $106,600. However, its equipment (with a five-year remaining life) was undervalued by $9,200 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $31,200, although no value had been recorded...
Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $317,300 in...
Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $317,300 in cash. Jasmine had a book value of only $232,100 on that date. However, equipment (having an eight-year remaining life) was undervalued by $64,800 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $11,400. Subsequent to the acquisition, Jasmine reported the following: Net Income Dividends Declared 2016 $ 78,600 $ 10,000 2017 85,500 40,000 2018 31,800 20,000 In accounting for...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT