Problem 5 The following transactions were completed by SMR Co. during 2018: Mar. 1 Purchased real property for P8.290,700, which included a charge of P290,700 representing property tax for March 1-June 30 that had been prepaid by the vendor; 25% of the purchase price is deemed applicable to land and the balance to buildings. A mortgage of P4,600,000 was assumed by SMR Co. on the purchase. Cash was paid for the balance. 30 Previous owners had failed to take care of normal maintenance and repair requirements on the building, necessitating current reconditioning at a cost of P340,200. May 15 Demolished garages in the rear of the building, P60,700 being recovered on the lumber salvage. The company proceeded to construct a warehouse. The cost of such construction was P1,001,300. Upon completion of construction, city inspectors ordered extensive modifications to the building as a result of failure on the part of the company to comply with the building safety code. Such modifications, which could have been avoided, cost P120,400. June 1 The company exchanged its own stock with a market value of P640,000 (par P400,000) for a machine. Nov. 20 The company contracted for parking lots and landscaping at a cost of P402,000 and P85,900, respectively. The work was completed and paid for on November 20. Dec. 31 The business was closed to permit taking the year-end inventory. During this time, required redecorating and repairs were completed at a cost of P60,400. Instructions: Give the journal entries to record each of the preceding transactions. (Disregard depreciation.) Problem 6 Juan Clemente Engineering Lid introduced a new production line. The expenditures incurred for this new line include the following: a. P 112,500 for the employee costs in fixing the interior of the factory to suit the production line; b. P 225,000 in preparing the factory site; C. P 11,250,000 in purchasing the machines for the line; d. P 135,000 in arranging the initial delivery; e. The installation and assembly costs of the machines of P 123,750 f. Costs of initial testing of P 90,000; g. Professional fees in assembling the function and installation of P 45,000; h. Costs of the grand opening of the new line of P 67,500 i. Costs of introducing a new product manufactured by this new production line of P 2,137,500; and j- Administration and other general overhead costs in studying and following up the installation of P 56,250. Requirement: Determine the cost of the PPE in relation to the new product line
