Southern Bank invests in trading securities and prepares quarterly financial statements. At the beginning of the fourth quarter of 2007, the bank held as trading securities 200 shares of Company E common stock that had originally cost $5,500. At that time, these securities had a fair value of $5,200. During the fourth quarter, the bank engaged in the following trading securities transactions:

Oct. 26 Purchased 300 shares of Company F common stock for $35 per share

Nov. 26 Sold 200 shares of Company E common stock for $25 per share

Dec. 10 Purchased 400 shares of Company G common stock for $41 per share

On December 31, 2007 the quoted market prices of the shares were as follows: E, $52 per share; F, $38 per share; and G, $40 per share.

Required

1. Prepare journal entries to record the preceding information for the fourth quarter.

2. Show what the bank reports on its fourth quarter 2007 income statement for these trading securities.

3. Show how the bank reports these trading securities on its balance sheet at the end of the fourth quarter of 2007.