Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following trial balance:

During 2020, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $136,750 while declaring and paying dividends of $36,000.

Assume that Chapman Company acquired Abernethy’s common stock for $605,600 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $101,800, its buildings were valued at $227,400, and its equipment was appraised at $164,500. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.

2. Prepare entry S to eliminate stockholders' equity accounts of subsidiary.

3. Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill.

4. Prepare entry I to eliminate the income accrual for 2020 less the amortization recorded by the parent using the equity method.

5. Prepare entry D to eliminate intra-entity dividend transfers.

6. Prepare entry E to recognize current year amortization expense.

7. Prepare entry *C to convert parent's beginning retained earnings to full accrual basis.

8. Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021.

9. Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021.

10. Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method.

11. Prepare entry D to eliminate intra-entity dividend transfers.

12. Prepare entry E to recognize current year amortization expense.

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Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory Land Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies Totals Debit $ 44,700 163,000 83,750 207,500 122,000 85,500 13,300 $719,750 Credit $ 55,100 50,000 250,000 162,500 202,150 $ 719,750 Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory Land Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies Totals Debit $ 44,700 163,000 83,750 207,500 122,000 85,500 13,300 $719,750 Credit $ 55,100 50,000 250,000 162,500 202,150 $ 719,750