During 2020, you were hired as the Chief Financial Officer for MC Travel Inc., a fairly young travel company that is growing quickly. A key accounting staff member has prepared the financial statements, but there are a couple of transactions that have not been recorded yet because she is waiting for your guidance regarding how these transactions should be recorded. In addition, the staff member is not confident in preparing cash flow statements, so you have been asked to prepare this statement for the 2020 year. MC Travel INC. reports under ASPE.

The transactions that have not been recorded yet are as follows.

1. On January 1, 2018, the company purchased a small hotel property in Miami for $50 million paying $10 million in cash issuing a 5% $40 million bond at par to cover the balance. The bond principal is payable on January 1, 2022. When you were hired, and began to review the financial information from previous years, you quickly realized that the land portion of the total purchase price had been capitalized with building, and depreciated. Depreciation has been incorrectly recorded on the building for 2018, 2019 and 2020, and the land is still included in the building account. The land portion of the purchase was appraised at $15 million in 2018, and the land is currently worth $17 million. The cost of the property is to be amortized over a 20 year period using the Straight-line basis, and a residual value of $5 million. The company?s tax rate is 30%.
2. During 2020, the president, who is also the principal shareholder in the business, transferred ownership of a vacant piece of land in the Carribbean to the company. A hotel will be constructed on this property beginning in 2015. The cost when the president purchased this property was $10 million and the fair market value, based on the professional appraisal, at the time it was trasferred to the company was $25 million. The president was issued 50,000 common shares in exchange for this land. This transaction has not yet been booked.

Additional information that you have gathered to assist in preparing the cash flow statement is as follows:

1. In 2020, equipment was purchased for $250,000. In addition, some equipment was disposed of during the year.
2. Investment income includes a dividend of $150,000 received on the temporary investment. Interest income of $160,000 was reinvested in temporary investments.

Instructions:

From the information on the next page, complete the necessary adjusting entries to record the transactions that have not been booked, and prepare the revised balance sheet and income statement for the year, keeping in mind that comparative figures will need to be restated. Once this is complete, prepare a statement of cash flows in good form using the indirect method for the year ended December 31, 2011. Assume all transaction amounts have been reported in CAD$.

Accumulated Depreciation's ending balance at December 31, 2020 is $5,175,000. Building and equipment account's ? ?ending balance at December 31, 2020 is $40,270,000. Accordingly please calculate the disposed-sold equipment's accumulated depreciation written off and how much cash was obtained from the sale.

Adjustment entries:

1. Land adjusting entry.

2. Adjustment for prior year end's accumulated depreciation, income tax payable and retained earnings.

ASSETS-Current assets Cash Temporary investments Accounts receivable Allowance for doubtful accounts Total current assets Capital assets Land MC TRAVEL INC. Balance Sheet December 31, Note: The statements before any adjustments. Building and equipment Accumulated depreciation Total capital assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable Interest payable Income taxes payable Dividents payable Total current liabilities Long term liabilities Long term bank loan Bond payable Future income tax liability Total long term liabilities Total liabilities Shareholders' equity Common shares Retained earnings Total shareholders' equity 5% Miami property due 2019 Total liabilities and shareholders' equity Difference: Assets - (Liabilities + Shareholders' equity) 2020 7,600,000 2,006,000 5,000,000 -200,000 14,406,000 250,000 55,270,000 -7,425,000 48,095,000 62,501,000 3,800,800 30,000 350,000 0 4,180,800 1,145,000 40,000,000 175,000 41,320,000 5,500,800 1,000,000 16,000,200 17,000,200 62,501,000 0 2019 5,040,000 1,900,000 3,700,000 -100,500 10,539,500 250,000 55,072,000 -4,950,000 50,372,000 60,911,500 4,100,750 15,000 250,000 100,000 4,465,750 807,000 40,000,000 150,000 40,957,000 5,422,750 1,000,000 14,488,750 15,488,750 60,911,500 0 MC TRAVEL INC. Income Statement For The Year Ended December 31, 2020, $ Sales Expenses: Salaries and wages Purchases from tour operators Depreciation expense Office, general, and selling expenses Bad debt expenses Interest on long-term debt Bond interest expense Total expenses Income before other income and expenses Investment income Gain on sale of equipment Income before income taxes Income tax expense Net income 37,500,000 5,000,000 22,500,000 2,500,000 3,489,800 150,000 30,000 2,000,000 35,669,800 1,830,200 256,000 73,000 2,159,200 647,750 1,511,450