• In auditing the records of Toronto Company for the year ended December 31, 2020, the following data are discovered; 1. Machine A listed at P4,500,000 was acquired on April 1, 2020 in exchange for P5,000,000 face value bonds maturing on April 1, 2030. The accountant recorded the acquisition by a debit to machinery and a credit to bonds payable for P5,000,000. The bonds are unquoted. Straight line depreciation was recorded based on a five year life and amounted to P600,000 for 9 months. 2. Machine B listed at P3,200,000 was purchased on January 1, 2020. The entity paid P500,000 down and P250,000 per month for 12 months. The last payment was made on December 30, 2020. Straight line depreciation based on a five-year life and no residual value was recorded at P700,000 for the year. Freight of P150,000 on Machine B was charged to freight in account. 3. Machine C was recorded at P3,000,000 which included the carrying amount of P540,000 of a machine accepted as a trade in. The list price of Machine C was P2,610,000 and the trade in allowance was P150,000. This transaction took place on December 22, 2020. 4. Machine D was acquired on January 10, 2020 in exchange for a past due account receivable of P4,200,000 on which an allowance of 20% was established at the end of prior year. The fair value of the machine on January 10 was estimated at P3,300,000. The machine was recorded by a debit to machinery and a credit to accounts receivable for P4,200,000. No depreciation was recorded on Machine D because it was never installed for use. In March, the machine was exchanged for 30,000 shares of the entity having a market value of P120 per share. The treasury shares account was debited for P4,200,000, the carrying amount of Machine D. Required: Prepare adjusting entries on December 31, 2020.