Exam 19: Accounting for Estates and Trusts

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 payment of $20,000 in funeral expenses.

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

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

The provisions of a will currently undergoing probate are: "One thousand shares of Wal-mart stock to my son; $10,000 in cash from my savings account to my brother; $5,000 in cash to my daughter; and any remaining property divided equally between my son and daughter." At the time of death, the estate included 1,400 shares of Wal-mart stock and $25,000 cash in the savings account. -What would the son have received from the settlement of the estate?

The party to receive a distribution of principal from an estate is legally called a(n):

The estate of Kent Talbert reported the following information: Value of estate assets \ 2,990,000 Conveyed to spouse 1,300,000 Conveyed to children 299,000 Conveyed to trust fund for benefit of spouse 650,000 Conveyed to charities 338,000 Funeral expenses 29,900 Administrative expenses 53,300 Debts 319,800 Required: Prepare a schedule to show the amount of the taxable estate.

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?

Which of the following is not a trust used for estate planning?

The provisions of a will currently undergoing probate are: "One thousand shares of Wal-mart stock to my son; $10,000 in cash from my savings account to my brother; $5,000 in cash to my daughter; and any remaining property divided equally between my son and daughter." At the time of death, the estate included 1,400 shares of Wal-mart stock and $25,000 cash in the savings account. -What is the remaining principal to be divided equally between the son and the daughter?

In a will, a devise is a

Which of the following is not subtracted to arrive at the taxable value of an estate?

Cash of $195,000 was conveyed to the appropriate beneficiary. Prepare the journal entry to record the 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 distribution of $4,000 to Anna Lee, an income beneficiary.

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

Title to the residence was conveyed to Louis Tweed. Prepare the journal entry to record the 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 ordinary repairs to the rental property of $5,000.

Debts of $52,000 were discovered. Prepare the journal entry to record the transaction.

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