Exam 19: Accounting for Estates and Trusts

REFERENCE: Ref.19_02 The provisions of a will currently undergoing probate are: "Two thousand shares of Dorn stock to my son;$30,000 in cash from my savings account to my brother;$50,000 in cash to my daughter;and any remaining property divided equally between my son and daughter." -Which of the following is not subtracted to arrive at the taxable value of an estate?

An inter vivos trust was created by Isaac Posney.Isaac owned a large department store in Juggins,Utah.Adjacent to the store,Isaac also owned a tract of land that was used as an extra parking lot when the store was having a sale or during the Christmas season.Isaac expected the land to appreciate in value and eventually be sold for an office complex or additional stores. Isaac placed the land into a charitable lead trust which would hold the land for ten years until Isaac's son would turn 21.At that time,title would be transferred to the son.The store will pay rent to use the land during the interim.The income generated each year from this usage will be given to a local church.The land was currently valued at $416,000. During the first year of this arrangement,the trustee recorded the following cash transactions: Required: Prepare all required journal entries for this trust fund including the entry to create the trust.

Title to the residence was conveyed to Louis Tweed. Prepare the journal entry to record the transaction.

What is the unified transfer credit?

REFERENCE: Ref.19_05 The executor of Danny Mack's estate has listed the following properties at fair value: Cash $200,000,Life Insurance Receivable $500,000,Investment in Stocks and Bonds $50,000,Rental Property $100,000,and Personal Property $80,000.Additionally,the executor found $100,000 of various debts incurred before the decedent's death.The cost of Danny Mack's funeral was $20,000. -Prepare the journal entry to record ordinary repairs to the rental property of $5,000.

REFERENCE: Ref.19_04 The following information pertains to 11 separate questions. The executor of the Estate of Kate Tweed discovered the following assets (at fair value): The will of Kate Tweed had the following provisions: $195,000 in cash went to Victor Vickery. All shares of PepsiCo went to Duchess Doyle. The residence went to Louis Tweed. All other estate assets were to be liquidated with the resulting cash going to the Sacred Church of Liberty,Missouri. -Prepare the journal entry to record the property of the estate.

Which of the following is not normally viewed as an adjustment to the principal of an estate?

The life insurance policy was collected. Prepare the journal entry to record the transaction.

What are the goals of probate laws? (1)gather and preserve all of the decedent's property; (2)carry out an orderly and fair settlement of all debts; (3)discover and follow the decedent's intent for the remaining property

What is a remainderman?

For each of the following situations,select the best answer concerning adjustments to principal and income of an estate.Assume that the will does not specify whether the item is to be classified as principal or income. (A. )Adjustment to the principal of the estate. (B. )Adjustment to the income of the estate. (C. )Allocated between the principal and income of the estate in some fair manner. (D. )Allocated between the principal and income of the estate determined by existence at date of death. ___ 1.Homestead allowance ___ 2.Insurance expenses ___ 3.Executor's fee ___ 4.Life insurance proceeds when estate is beneficiary ___ 5.Investment commissions ___ 6.Debts incurred prior to death ___ 7.Water and other utility expenses ___ 8.Liquidating dividends ___ 9.Dividend income ___ 10.Funeral expenses ___ 11.Extraordinary repairs on income-producing property ___ 12.Attorney fees ___ 13.Property taxes ___ 14.Gains and losses on the sale of securities ___ 15.Interest income ___ 16.Court costs ___ 17.Ordinary repairs on income-producing property ___ 18.Accounting fees

Which of the following is usually not accounted for as an adjustment to a trust's income?

REFERENCE: Ref.19_03 During the most recent year,an estate generated income of $26,000: The interest income was conveyed immediately to the beneficiary stated in the decedent's will.Dividends of $1,560 were given to the decedent's church. -What amount of federal income tax must be paid?

An additional savings account of $15,600 was located by the executor. Prepare the journal entry to record the transaction.

The estate of Kent Talbert reported the following information: Required: What would be the taxable estate value?

Administrative expenses of $13,000 were paid. Prepare the journal entry to record the transaction.

How much would James have received from the estate?

Which of the following is usually accounted for as an adjustment to a trust's principal?

What are the three goals of probate laws?

REFERENCE: Ref.19_02 The provisions of a will currently undergoing probate are: "Two thousand shares of Dorn stock to my son;$30,000 in cash from my savings account to my brother;$50,000 in cash to my daughter;and any remaining property divided equally between my son and daughter." -Assume that the estate included 1,200 shares of Dorn stock,$22,000 cash in the savings account,and $70,000 in cash from other sources.What would the daughter have received from the settlement of the estate?