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P Company acquired the assets and assumed the liabilities of S Company on January 1 2010 for $510000 when S Company’s balance sheet

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: 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%. 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.

Apr 21 2020 View more View Less

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