Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2011. 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 life) |
120,000 |
|
|
Cash and short term investments |
60,000 |
|
|
Common stock |
250,000 |
|
|
Equipment (net) (5 year life) |
200,000 |
|
|
Inventory |
90,000 |
|
|
Land |
80,000 |
|
|
Long term liabilities (mature 12/31/14) |
150,000 |
|
|
Retained earnings, 1/1/11 |
100,000 |
|
|
Supplies |
10,000 |
|
|
Totals |
$600,000 |
$600,000 |
During 2011, Abernethy reported income of $80,000 while paying dividends of $10,000. During 2012, Abernethy reported income of $110,000 while paying dividends of $30,000.