Stuart Corp. purchased 100 shares of Dumb Co. stock for $8 per share and 200 shares of Silly Inc. stock for $12 per share. The Dumb Co. stock will be held for at least 3 years and is classified as available-for-sale; the Silly, Inc. stock is classified as trading. As of December 31, the Dumb Co. stock is selling for $9 per share and the Silly Inc. stock is selling for $13 per share. Stuart had net income of $10,000 before reporting the impact of investment transactions.

Required: a. Record the December 31 adjusting entries for investments.

b. What is Stuart Corp.'s net income after adjusting for investments?

c. What is the appropriate balance sheet classification for each investment?