I am having trouble figuring out retained earnings for Entry S December 31, 2015. Please help!
Problem 3-20 (LO 3-3a)
Chapman Company obtains 100 percent of Abernethy Company?s stock on January 1, 2014. As of that date, Abernethy has the following trial balance:
|Additional paid-in capital||50,000|
|Buildings (net) (4-year life)||201,000|
|Cash and short-term investments||61,750|
|Equipment (net) (5-year life)||447,500|
|Long-term liabilities (mature 12/31/17)||162,000|
|Retained earnings, 1/1/14||514,850|
During 2014, Abernethy reported net income of $97,000 while declaring and paying dividends of $12,000. During 2015, Abernethy reported net income of $141,250 while declaring and paying dividends of $48,000.
Assume that Chapman Company acquired Abernethy?s common stock for $933,200 in cash. As of January 1, 2014, Abernethy?s land had a fair value of $137,700, its buildings were valued at $255,400, and its equipment was appraised at $420,750. Chapman uses the equity method for this investment.
Prepare consolidation worksheet entries for December 31, 2014, and December 31, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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