EXERCISE 2-4 Asset Purchase, Cash LO 6

P Company acquired the assets and assumed the liabilities of S Company on January 1, 2013, for $510,000 when S Company's 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 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.