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 companys 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

Do the adjusting entries for 2019:

1. Land adjusting entry.

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

MC TRAVEL INC. Balance Sheet December 31, Note: The statements before any adjustments. 2020 2019 ASSETS-Current assets Cash Temporary investments Accounts receivable Allowance for doubtful accounts Total current assets 7,600,000 2,006,000 5,000,000 -200,000 14,406,000 5,040,000 1,900,000 3,700,000 -100,500 10,539,500 Capital assets Land Building and equipment Accumulated depreciation Total capital assets 250,000 55,270,000 -7,425,000 48,095,000 250,000 55,072,000 -4,950,000 50,372,000 Total assets 62,501,000 60,911,500 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable Interest payable Income taxes payable Dividents payable Total current liabilities 3,800,800 30,000 350,000 0 4,180,800 4,100,750 15,000 250,000 100,000 4,465,750 Long term liabilities Long term bank loan Bond payable Future income tax liability Total long term liabilities 5% Miami property due 2019 1,145,000 40,000,000 175,000 41,320,000 807,000 40,000,000 150,000 40,957,000 Total liabilities 45,500,800 45,422,750 Shareholders' equity Common shares Retained earnings Total shareholders' equity 1,000,000 16,000,200 17,000,200 1,000,000 14,488,750 15,488,750 62,501,000 60,911,500 Total liabilities and shareholders' equity Difference: Assets - (Liabilities + Shareholders' equity) 0 0 MC TRAVEL INC. Income Statement For The Year Ended December 31, 2020- 37,500,000 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 5,000,000 22,500,000 2,500,000 3,489,800 150,000 30,000 2,000,000 35,669,800 Income before other income and expenses Investment income Gain on sale of equipment Income before income taxes Income tax expense Net income 1,830,200 256,000 73,000 2,159,200 647,750 1,511,450 MC TRAVEL INC. Balance Sheet December 31, Note: The statements before any adjustments. 2020 2019 ASSETS-Current assets Cash Temporary investments Accounts receivable Allowance for doubtful accounts Total current assets 7,600,000 2,006,000 5,000,000 -200,000 14,406,000 5,040,000 1,900,000 3,700,000 -100,500 10,539,500 Capital assets Land Building and equipment Accumulated depreciation Total capital assets 250,000 55,270,000 -7,425,000 48,095,000 250,000 55,072,000 -4,950,000 50,372,000 Total assets 62,501,000 60,911,500 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable Interest payable Income taxes payable Dividents payable Total current liabilities 3,800,800 30,000 350,000 0 4,180,800 4,100,750 15,000 250,000 100,000 4,465,750 Long term liabilities Long term bank loan Bond payable Future income tax liability Total long term liabilities 5% Miami property due 2019 1,145,000 40,000,000 175,000 41,320,000 807,000 40,000,000 150,000 40,957,000 Total liabilities 45,500,800 45,422,750 Shareholders' equity Common shares Retained earnings Total shareholders' equity 1,000,000 16,000,200 17,000,200 1,000,000 14,488,750 15,488,750 62,501,000 60,911,500 Total liabilities and shareholders' equity Difference: Assets - (Liabilities + Shareholders' equity) 0 0 MC TRAVEL INC. Income Statement For The Year Ended December 31, 2020- 37,500,000 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 5,000,000 22,500,000 2,500,000 3,489,800 150,000 30,000 2,000,000 35,669,800 Income before other income and expenses Investment income Gain on sale of equipment Income before income taxes Income tax expense Net income 1,830,200 256,000 73,000 2,159,200 647,750 1,511,450