Advanced Accounting Unit 3 - 1 award 10 out of 10.00 points...

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1. award: 10 out of 10.00 points Problem 3-20 [LO4a] Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2012. As of that date, Abernethy has the following trial balance: Debit Credit Accounts payable $ 53,700 Accounts receivable $ 41,000 Additional paid-in capital 50,000 Buildings (net) (4- year life) 184,000 Cash and short-term investments 77,250 Common stock 250,000 Equipment (net) (5- year life) 400,000 Inventory 117,500 Land 107,500 Long-term liabilities (mature 12/31/15) 173,000 Retained earnings, 1/1/12 417,450 Supplies 16,900 Totals $ 944,150 $ 944,150 During 2012, Abernethy reported income of $98,000 while paying dividends of $12,000. During 2013, Abernethy reported income of $128,250 while paying dividends of $39,000. Assume that Chapman Company acquired Abernethy’s common stock for $851,300 in cash. As of January 1, 2012, Abernethy’s land had a fair value of $124,200, its buildings were valued at $254,400, and its equipment was appraised at $378,500. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2012, and December 31, 2013. Date General Journal Debit Credit
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Dec. 31, 2012 Entry S Common Stock-Abernethy 250,000 Additional Paid in Capital 50,000 Retained Earnings, 1/1/12 417,450 Investment in Abernethy 717,450 Entry A Land 16,700 Buildings 70,400 Goodwill 68,250 Equipment 21,500 Investment in Abernethy 133,850 Entry I Equity in Subsidiary Earnings 84,700 Investment in Abernethy 84,700 Entry D Investment in Abernethy 12,000 Dividends Paid 12,000 Entry E Depreciation Expense 13,300 Equipment 4,300 Buildings 17,600 Dec. 31, 2013 Entry S Common Stock-Abernethy 250,000 Additional Paid in Capital 50,000 Retained Earnings, 1/1/13 503,450 Investment in Abernethy 803,450 Entry A Land 16,700 Buildings 52,800 Goodwill 68,250 Equipment 17,200 Investment in Abernethy 120,550 Entry I Equity in Subsidiary Earnings 114,950 Investment in Abernethy 114,950
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Entry D
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