Exam 19: Accounting for Estates and Trusts

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

In settling an estate, what is the meaning of the term devise?

What is the process of abatement?

What is the amount of the personal exemption on an estate income tax return?

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 the distribution of $4,000 to Anna Lee, an income beneficiary.

In an executor's accounting for an estate, debts and other obligations are recorded

After expenses of administering an estate, which claims would be next in a typical order of priority to establish which creditors will get paid? (1) funeral expenses (2) medical expenses of the last illness (3) debts and taxes given preference under laws (4) all other claims.

The terms of a will currently undergoing probate are: "A gift to my brother David of $25,000 cash; to my son James, $50,000 from my savings account; and to my Daughter Lila, all of my remaining property." At the time of death, the balance in the savings account was $40,000, and there was additional cash (after payment of funeral expenses and all claims against the estate) of $70,000. The gift to David is a

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

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

Under what circumstance does an estate have an executor?

What guidelines must be followed to classify a transaction as associated with the principal of an estate or as an income transaction?

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 the collection of the life insurance policy.

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. The shares of Kodak were sold for $145,600. Prepare the journal entry to record the transaction.

What is meant by "an individual dies intestate"?

Assume that Bob Smith dies on May 25, 2013. Mr. Smith's assets include the following: ABC Stock costing $30,000 but valued at $40,000; a house costing $280,000 but valued at $620,000; life insurance in the amount of $600,000; and cash from various sources totaling $50,700. Three credit cards in Mr. Smith's name had balances totaling $8,530 on the date of death. The estate paid funeral and final medical expenses in the amount of $50,492. There were no charitable gifts designated by the will, and Mr. Smith was single at the time of his death. What is the amount of the taxable estate?

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.

How may real property be treated in identifying estate property subject to probate?

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

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