A transcript of the Company's Machinery and Equipment account for 2017 as follows:

Machinery Equipment

Date Item Dr Cr

Jan-01 Balance Forwarded 100,000

Mar-01 Heavy duty Jack hammer 10,000

May-01 Air compressor 120,000

Jun-01 Vacuum Cleaner 4,000

Aug-01 Proceeds from sale of tool rack 500

Nov-01 Electric Drill 6,000

Nov-01 Motor Control 4,000

Dec-01 Motor Control 1,360

245,360 500

Your examination reveals the following information:

a. The company uses a ten-year life for all machinery and equipment for depreciation purposes.

Depreciation is computed by the straight-line method. Six months depreciation is recorded in the year

of acquisition or retirement. For 2017, the company recorded depreciation of Php 15,000 on Machinery

and Equipment.

b. There are two items in the January 1 balance which have been fully depreciated.

Tool rack 2,000

Lift truck 12,000

Total 14,000

c. The jack hammer was purchased for Php 7,000 from a firm in financial distress. The chief engineer and

a used machinery dealer agreed that the practically new machine was worth Php 10,000 in the open

market. The company paid Php 7,000 and a credit of Php 3,000 was made to Sundry Income.

d. For production reasons, the new air compressor was installed in a small building that was erected in

2017 to exclusively house the compressor. The cost of the building, which has a 15 year life, was Php

40,000 and is included in the Php 120,000 voucher for the air compressor.

e. The vacuum cleaner was delivered to the home of the company president for personal use.

f. On September 1, the company determined that a production casting machine was no longer needed

and advertised it for sale for Php 2,000 after determining from a used machinery dealer that this was

its market value. The casting machine had been purchased fro Php 5,000 on September 1, 2012.

g. The company elected to exercise an option under a lease purchase agreement to buy the electric drill

by paying Php 6,000. The drill had been installed on February 1, 2017, at a monthly rental of Php 300.

h. On November 1, a motor control was purchased for Php 40,000. A Php 4,000 down payment was

made and the balance will be paid in monthly installment over a three year period. The December 1

includes interest charges of Php 360. Legal title to the motor control will pass to the company until

the payments are completed.

Required:

Prepare the auditor's journal entries required at December 31, 2017