In 2023, 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 2023 year. MC Travel INC. reports under ASPE.
The transactions that have not been recorded yet are as follows.
On January 1, 2021, the company purchased a small hotel property in Miami for								$50	million
paying	$10	million in cash and 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				2021	2022	and	2023	, and the land is
still included in the building account. The land portion of the purchase was appraised at									$15
million in 2021, 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%	.
During 2023, 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								$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:
In 2023, equipment was purchased for				$250,000	. In addition, some equipment was disposed of
during the year.
Investment income includes a dividend of				$150,000	received on the temporary investment. Interest
income of	$106,000	was reinvested in temporary investments.
		1.Do the adjusting entries for 2022 Additional information that you have gathered to assist in preparing the cash flow statement is as follows: In 2023, equipment was purchased for $250,000 . In addition, some equipment was disposed of during the year. Investment income includes a dividend of $150,000 received on the temporary investment. Interest income of $106,000 was reinvested in temporary investments. Following are the financial statements for MC Travel Inc. For 2023 and 2022 fiscal years.