Hot Water Company purchased 1,000 shares of Big Pipe Company’s common stock for $24 each. It was a small investment, but Hot Water intended to hold the investment for the long term. At year-end, the total market value of the shares had increased to $27,500. Six months into the following year, Hot Water decided to sell the investment at its then-current market price of $30 per share.

(a) Show how the initial purchase of the shares would be recorded in Hot Water’s accounting system.

(b) Show any entry to the accounting system that should be made at the end of the first year.

(c) Show how the sale of the investment would be recorded in the accounting system.