QUESTION 3 (15 marks):

During 2021, Cornwall Company had the following transactions relating to its investments held for trading:

Feb 1 Purchased 1,000 common shares of Kettle Corp for $12 each.

May 20 Purchased 3,000 shares of Capital Corp for $22 each.

Jul 1 Received dividends totalling $1,000 from Kettle Corp.

Sep 10 Sold 1,000 shares of the investment in Capital Corp for $20 per share.

On December 31, Cornwalls year end, the Kettle Corp shares are trading at $10 and the Capital Corp shares are trading at $25.

Instructions

a) Record the transactions and prepare any adjusting entries required at December 31, 2021.

b) Determine the amounts to be reported on Cornwalls balance sheet and income statement at December 31, 2021 related to its investment in equity securities.