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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 $10 million in cash and issuing a 5% $40 paying 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 2020 2018 2019 and still included in the building account. The land portion of the purchase was appraised at $17 million in 2018, and the land is currently worth amortized over a 20 million. The company's tax rate is year period using the straight-line basis, and a residual value of 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 2021. The cost when the president purchased this property was and the fair market value, based on the professional appraisal, at the time it was trasferred to the company was million. The president was issued $25 exchange for this land. This transaction has not yet been booked. 1) In 2020, equipment was purchased for during the year. million bond at par to cover Additional information that you have gathered to assist in preparing the cash flow statement is as follows: 2) Investment income includes a dividend of income of $106,000 was reinvested in temporary investments. million. The cost of the property is to be Following are the financial statements for MC Travel Inc. For (Please see financial statements on sheet #3) $50 million 2020 $250,000 . In addition, some equipment was disposed of and the land is $15 $150,000 received on the temporary investment. Interest 50,000 common shares in and $10 million Instructions: From the information on the next page, complete the necessary adjusting entries to record the transactions that have not been booked, and prepare the revised balance sheet and income statement for the year, keeping in mind that comparative figures will need to be restated. Once this is complete, prepare a statement of cash flows in good form using the indirect method for the year ended December 31, 2020. Assume all transaction amounts have been reported in CAD$. $5 2019 fiscal years. 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 $10 million in cash and issuing a 5% $40 paying 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 2020 2018 2019 and still included in the building account. The land portion of the purchase was appraised at $17 million in 2018, and the land is currently worth amortized over a 20 million. The company's tax rate is year period using the straight-line basis, and a residual value of 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 2021. The cost when the president purchased this property was and the fair market value, based on the professional appraisal, at the time it was trasferred to the company was million. The president was issued $25 exchange for this land. This transaction has not yet been booked. 1) In 2020, equipment was purchased for during the year. million bond at par to cover Additional information that you have gathered to assist in preparing the cash flow statement is as follows: 2) Investment income includes a dividend of income of $106,000 was reinvested in temporary investments. million. The cost of the property is to be Following are the financial statements for MC Travel Inc. For (Please see financial statements on sheet #3) $50 million 2020 $250,000 . In addition, some equipment was disposed of and the land is $15 $150,000 received on the temporary investment. Interest 50,000 common shares in and $10 million Instructions: From the information on the next page, complete the necessary adjusting entries to record the transactions that have not been booked, and prepare the revised balance sheet and income statement for the year, keeping in mind that comparative figures will need to be restated. Once this is complete, prepare a statement of cash flows in good form using the indirect method for the year ended December 31, 2020. Assume all transaction amounts have been reported in CAD$. $5 2019 fiscal years.

Answer rating: 100% (QA)

Detailed Explanation The updated financial statements and the cash flow statement of MC Travel Inc are in Canadian dollars Adjusted entries Transaction 1 Land and Building Purchase Adjust the land val... View the full answer