Prepare Income Statement and Balance Sheet. Please show your work.

Records as of Dec 31, 2020.

	Debit	Credit
Retained profits (1 Jan 2020)		$ 3,087,000
Cost of Building	$ 12,000,000
Acct dep for Building (1 Jan 2020)		$ 3,000,000
Prepaid insurance (building)	$ 120,000
Accounts payable		$ 780,000
Business checking account	$ 400,500
8% long term loan		$ 3,000,000
Accounts receivable	$ 675,000
Land	$ 3,000,000
Cost of Machinery	$ 5,625,000
Acct dep for Machinery (1 Jan 2020)		$ 3,510,000
Transportation cost	$ 570,000
Revenue		$ 7,500,000
Purchases	$ 4,800,000
Return from customers	$ 96,000
Administrative expenses	$ 768,000
Provision for bad debt		$ 97,500
Long term loan interest	$ 120,000	$ 57,000
Inventory (1 Jan 2020)	$ 357,000
Ordinary shares ($1 per share)		$ 6,750,000
Share premium		$ 750,000
	$ 28,531,500	$ 28,531,500

Additional notes:

A customer declared bankruptcy, write off $40,000. Provision for bad debt is 5% of *remaining* accounts receivables. Prepaid insurance (building) was $100,000 on Dec, 31, 2020. Tax is $120,000 The management issued extra 20,000 shares ($2.5 each) on Dec, 30, 2020. Proceeds are paid as bonuses to workers. No interest has been recorded so far for the long term loan.

Land is now valued at $4,500,000 as a result of a new appraisal. Land-no depreciation. Building-2% per year straight line Machinery-10% reducing balance method. Audit expense is $30,000