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August 14th, 2017 
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Asset Purchase, Cash
P Company acquired the assets and assumed the liabilities of S Company on January 1, 2010, for $510,000 when S Company”s balance sheet was as follows:
S COMPANY Balance Sheet January 1, 2010
| 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 12/31/2015, Par | 480,000 |
| Common stock, $2 par value | 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:
- Inventory has a fair value of $126,000.
- Land has a fair value of $198,000.
- The bonds pay interest semiannually on June 30 and December 31. The current yield rate on bonds of similar risk is 8%.
Required:
Prepare the journal entry on P Company”s books to record the acquisition of the assets and assumption of the liabilities of S Company.
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