Northern Corporation, the investment banking company, often has extra cash to invest. Suppose Northern buys 800 shares

Question:

Northern Corporation, the investment banking company, often has extra cash to invest. Suppose Northern buys 800 shares of Andy, Inc., stock at $54 per share. Assume Northern expects to hold the Andy stock for one month and then sell it. The purchase occurs on December 15, 2010. At December 31, the market price of a share of Andy stock is $66 per share.

Requirements
1. What type of investment is this to Northern? Give the reason for your answer.
2. Record Northern’s purchase of the Andy stock on December 15 and the adjustment to market value on December 31.
3. Show how Northern would report this investment on its at December 31 and any gain or loss on its income statement for the year ended December 31, 2010.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...