Portfolio Problem (Due 11/26/02) Name ________________________

Accounting for investments under SFAS No. 115
Pick any five stocks and obtain a current trading price or closing price) on Thursday November 21.

Where to look? There are Web sites such as:

http://finance.lycos.com/finance.asp
http://quote.yahoo.com/
http://moneycentral.msn.com/investor/research/welcome.asp

Or just pick up a newspaper. Closing prices are printed in the next day's paper.

Using the five stocks and the November 21 price, assume that a 1,000-share block of each stock was purchased and calculate the total cost of your portfolio (price per share x 1,000 shares).

Determine the value of your portfolio again using a Friday, November 22 trading price and compute the gain or loss on your portfolio (the difference between the cost at 11/21 and market value at 11/22).

Stock TIC	Price/share 11/21//02	Total Cost 11/21/02	Price/Share 11/22/02	Total Value 11/22/02	Gain (Loss)
Total

What is the return on your investment at 11/22/02? (Return is computed as the Total gain or loss divided by the cost of the portfolio at 11/21/02).

Pick any stock in your portfolio, and assume that the stock was sold on Monday November 25. What was the realized gain or loss on the sale (the difference between original cost and selling price)?

Choose a new stock to replace the stock sold. Assume that 1,000 shares of the new stock were purchased on Monday November 25. Determine the cost basis of your new portfolio on Monday November 25 (the four original stocks at the November 21 purchase price and the new stock at the November 25 purchase price).

Calculate the market value of your new portfolio on Monday November 25.

Stock TIC	Historical Cost/share	Total Cost	Price/share11/25/02	Total value 11/25/02	Gain or Loss
Total

Use the information you have gathered to account for your portfolio under SFAS 115:

Assume that your portfolio is a Trading Portfolio. Prepare the adjusting entry required to value your portfolio at market value at Friday, November 22.

Record the stock sale on Monday November 25.

Record the purchase of the new stock on Monday November 25.

Prepare the adjusting entry required to value your portfolio to market on Monday November 25. (Use T-accounts for the Investment and Adjustment to Market accounts to demonstrate that your adjusting entry actually gives you the required market value):