Griffen Company had no short-term investments on December 31, 1989, but had the following transactions involving short-term investments during 1990.

Jan. 9 Paid \(\$ 60,000\) to buy six-month, U.S. Treasury bills, \(\$ 60,000\) principal amount, \(8 \%\), dated January 9 .

Feb. 2 Purchased 800 shares of GTE common stock at \(351 / 2\) plus a \(\$ 400\) brokerage fee.

15 Purchased 600 shares of Aetna common stock at \(64 \frac{1}{4}\) plus a \(\$ 300\) brokerage fee.

Mar. 2 Paid \(\$ 45,000\) for U.S. Treasury Notes, \(\$ 45,000\) principal amount, \(9 \%\), dated March 2, 1990, due March 2, 1994.

16 Purchased 1,200 shares of Nynex common stock at \(551 / 8\) plus a \(\$ 975\) brokerage fee.

June 2 Received a \(\$ 0.45\) per share cash dividend on the GTE common shares.

16 Sold 600 shares of GTE common stock at 37 less a \(\$ 300\) brokerage fee.

July 11 Received a check for the principal and accrued interest on the U.S. Treasury bills that matured on July 9 .

Aug. 13 Received a \(\$ 0.55\) per share cash dividend on the Aetna common shares.

Sept. 2 Received a check for six-months' interest on the U.S. Treasury Notes purchased on March 2 .

2 Received a \(\$ 0.45\) per share cash dividend on the remaining GTE common shares owned by Griffen Company.

Nov. 13 Received a \(\$ 0.55\) per share cash dividend on the Aetna common shares.

On December 31, 1990, the market prices of the equity securities held by Griffen Company were: GTE, \(381 / 2\); Aetna, 63; and Nynex, \(477 / 8\).

\section*{Required}

1. Prepare general journal entries to record the above transactions.

2. Prepare a schedule to calculate the lower of cost or market of Griffen's shortterm investments in marketable equity securities.

3. Prepare adjusting entries, if necessary, to record accrued interest on Griffen Company's investments in debt obligations and to reduce the marketable equity securities to the lower of cost or market.

Problem 7-2A Credit sales and credit card sales (L.O. 2, 3)