P Company acquired the assets and assumed the liabilities of S Company on January 1,...
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Accounting
P Company acquired the assets and assumed the liabilities of S Company on January 1, 2013, for $510,000 when S Companys balance sheet was as follows:
| S COMPANY Balance Sheet January 1, 2013 | ||
| Cash | $96,000 | |
| Receivables | 55,200 | |
| Inventory | 110,400 | |
| Land | 169,200 | |
| Plant and equipment (net) | 466,800 | |
| Total | $897,600 | |
| Accounts payable | $44,400 | |
| Bonds payable, 10%, due 12/31/2018, Par | 480,000 | |
| Common stock, $2 par value | 120,000 | |
| Retained earnings | 253,200 | |
| Total | $897,600 | |
Fair values of S Companys assets and liabilities were equal to their book values except for the following:
| 1. | Inventory has a fair value of $126,000. | |
| 2. | Land has a fair value of $198,000. | |
| 3. | The bonds pay interest semiannually on June 30 and December 31. The current yield rate on bonds of similar risk is 8%. |
Prepare the journal entry on P Companys books to record the acquisition of the assets and assumption of the liabilities of S Company
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