Hoyle, Schaefer and Doupnik Chapter3 Problem 22

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

During 2020, Abernethy reported net income of $80,000 while paying dividends of $10,000. During 2021, Abernethy reported income of $110,000 while paying dividends of $30,000. Requirement: Assume that Chapman Company acquired Abernethys common stock for $520,000 in cash. All of Abernethys accounts are estimated to have fair value approximately equal to present book values. Chapman uses the partial equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020.

Cash and short term investment Accounts Receivable Inventory Supplies Buildings (net) 4-year life Equipment (net) 5-year life Land Total Assets 60,000 40,000 90,000 10,000 120,000 200,000 80,000 600,000 Accounts Payable 50,000 Long-term liabilities (mature 12/31/23) 150,000 Common Stock 250,000 Additional Paid in Capital 50,000 R/E 1/1/20 100,000 Total Liabilities and Equity 600,000