Required: (1) Set up machinery and machine tools accounts as they should appear at the end of 20x7. (2) Give individual journal entries that are necessary to correct the accounts as of Dec. 31, 20x7, assuming that the nominal accounts are still open.

On December 31, 20X7, the Aerospace Co. shows the following account for machinery that it had assembled for its own use during 20X7: MACHINERY (JOB ORDER #62) Cost of dismantling old machine P570 Cash proceeds from sale of P500 old machine Raw materials used in 13,600 Depreciation for 20X7 3,462 construction of new machine (10% of P34,620) Labor in construction of new machine 9,800 Cost of installation 1,400 Materials spoiled in machine trial runs 600 Profit on construction 6,900 Purchase of machine tools 2,250 An analysis of the details in the account discloses the following: a) The old machine, which was removed upon the installation of the new one, had been fully depreciated. b) Cash discounts received on the payments for materials used in construction totaled P400 and these were reported in the purchases discount account. c) The factory overhead account shows a balance of P52,000 for the year ended December 31, 20X7; this balance exceeds normal overhead on regular plant activities by approximately P2,900 and is attributable to machine construction. d) A profit was recognized on construction for the difference between costs incurred and the price at which the machine could have purchased. e) Machine tools have an estimated life of 3 years; machinery has an estimated life of 10 years. The machinery was used for production beginning on September 1, 20X7