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P Company acquired the assets and assumed the liabilities of S Company on January 1, 2018, for $510,000 when S Company's balance sheet was as follows: S COMPANY Balance Sheet January 1, 2018 Cash $ 96,000 Receivables 55,200 Inventory 110,400 Land 169,200 Plant and equipment (net) 466,800 Total $897,600 ccounts payable $ 44,400 Bonds payable, 10%, due 12/31/2023, Par Common stock, $2 par value 480,000 120,000 Retained earnings 253,200 Total $897,600 Fair values of S Company's 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 Company's books to record the acquisition of the assets and assumption of the liabilities of S Company.

P Company acquired the assets and assumed the liabilities of S Company on January 1, 2018, for $510,000 when S Company's balance sheet was as follows: S COMPANY Balance Sheet January 1, 2018 Cash $ 96,000 Receivables 55,200 Inventory 110,400 Land 169,200 Plant and equipment (net) 466,800 Total $897,600 ccounts payable $ 44,400 Bonds payable, 10%, due 12/31/2023, Par Common stock, $2 par value 480,000 120,000 Retained earnings 253,200 Total $897,600 Fair values of S Company's 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 Company's books to record the acquisition of the assets and assumption of the liabilities of S Company.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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P Company acquired the assets and assumed the liabilities of S Company on January 1, 2018, for $510,000 when S Company's balance sheet was as follows: S COMPANY Balance Sheet January 1, 2018 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 12/31/2023, Par Common stock, $2 par value 480,000 120,000 Retained earnings 253,200 Total $897,600 Fair values of S Company's 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 Company's books to record the acquisition of the assets and assumption of the liabilities of S Company. Page 1 of 1
Transcribed Image Text:P Company acquired the assets and assumed the liabilities of S Company on January 1, 2018, for $510,000 when S Company's balance sheet was as follows: S COMPANY Balance Sheet January 1, 2018 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 12/31/2023, Par Common stock, $2 par value 480,000 120,000 Retained earnings 253,200 Total $897,600 Fair values of S Company's 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 Company's books to record the acquisition of the assets and assumption of the liabilities of S Company. Page 1 of 1
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