Rebel Alliance Limited, a public company, acquires 36,000 of Empire Inc.s 90,000 common shares outstanding for $21 per share on January 2, 2018. On June 15, 2018, Empire pays a cash dividend of $75,000. On December 31, 2018, Empire reports a profit of $240,000 for the year. Empire Inc. shares are trading at $26 per share on that date. Both companies have December 31 year ends.

REQUIRED: a. Record the above transactions and any required adjusting journal entries for the year ended December 31, 2018, assuming Rebel Alliance Limited intends to hold the investment in Empire for strategic purposes and Rebel Alliance has significant influence over Empire. No descriptions are required.

b. Calculate the amount that would be reported on the balance sheet of Rebel Alliance Limited for the investment in Empire at December 31, 2018.

c. What would Rebel Alliance report for its investment in Empire on its balance sheet if it was holding Empire shares for trading purposes (account and amount)?