12-8. Audit of Investments and Related Accounts From the following information: a) Prepare a work sheet analyzing the Investment in Trading Securities account for the period January 1, 2017, to December 31, 2017, showing transactions, adjustments and final balance as of December 31, 2017. b) Prepare the necessary audit adjustments to correct the following Investment account as of December 31, 2017, appearing in the records of the Color Company: Date Explanation Debit Credit 2017 Jan. 1 Balance 188,300 31 Sold Red ordinary 21,364 Mar. 31 Bought White ordinary 12, 125 June 30 Dividend on Blue ordinary 10,000 July 31 Sold Blue ordinary . 8, 750 Aug. 1 Sold Green bonds 22,500 The audit work papers of the preceding year show that the account balance as of January 1, 2017, consisted of the following:Substantive Tests of Investments 431 Red Company ordinary: 1,000 shares, purchased in June, 1999, P20 per share P 20,000 2,000 shares, purchased in August, 2002, P16 per share 32,000 1,500 shares, purchased in May, 2015, P22 per share 33,000 White Company ordinary: 2,000 shares, purchased in January 2015, P33 per share 66,000 Blue Company ordinary: 100 shares, purchased in August 2001, P73 per share (par P100) 7,300 Green Company 15 percent bonds: 20 bonds, P1,000 each, purchased in July 2004, at par (interest dates February 1 and August 1) 20,000 P178,300 Your examination discloses the following: 1) In January, 2017, 1,000 ordinary shares of the Red Company purchased in May, 2015, were sold for P21,364, net of brokerage. 2) In March, 2017, 500 ordinary shares of White Company were purchased at P24 per share plus brokerage, for P12, 125. 3) In June, 2017, the Blue Company paid a 100 percent share dividend ordinary on ordinary. 4) In July, 2017, the Color Company sold to its president, for P125 per share, 100 ordinary shares of Blue Company, for which the president gave his check for P8, 750 and a letter in which he agreed to pay the balance upon demand of the treasurer of the company. 5) On August 1, 2017, the Green Company redeemed its five percent bonds at 1 10 plus accrued interest. 6) The total market value of the securities at year-end amounted to P150,000. (AICPA adapted)13-9. Audit of Property. Plant and Equipment As the first auditor of the AFH Company you discover that the following entries have been made in the property, plant, and equipment account: Property, Plant, and Equipment 2016 2016 Plant purchased 600,000 Depreciation 63,100 Legal fees 7,000 Insurance 24,000 2017 2017 Repairs 20,000 Depreciation 68,790 Addition to building 100,000 2018 2018 Repairs 30,000 Machine sold 5,000 Insurance 28,000 Depreciation 74,210 Machine purchased 70,000472 Chapter 13 Additional information is discovered as follows: 1) The purchase of the plant included a building and machinery. When the plant was purchased, an appraisal showed that the building was valued at P390,000 and the machinery at P260,000. 2) Depreciation has been recorded each year at 10% of the balance in the account. The 10% was chosen because the property is being depreciated over 10 years for tax purposes. Subsequent investigation indicates that the expected lives at the time of acquisition were: building - 20 years, machinery - 8 years. 3) Each insurance payment was made on January 1 and was for a 2-year policy. 4) The machine that was sold in 2018 had an original cost of P8,000. 5) All purchases and sales of property, plant, and equipment items occurred at the beginning of the year indicated. REQUIRED: Prepare adjusting entries at December 31, 2018, to correct the books assuming they have not been closed for the year