Recording activity of an estate and trust. You are given the following trial balance of the estate of Sheri Shannon as of December 31, 20X3. Her will stipulated that the executor should be granted $30,000 from principal cash. The remainder of the estate’s principal assets and its income assets are to be transferred to Community Bank, which will act as trustee of an endowment fund. Income from trust assets shall be used for scholarships for accounting majors at a local university.
|
Debit |
Credit |
|
|
Cash—Principal |
115,950 |
|
|
Cash—Income |
5,800 |
|
|
Pal Corp Stock |
60,000 |
|
|
BVD Corp Stock |
40,000 |
|
|
Rapid Transit Corp Bonds |
30,300 |
|
|
Coin Collection |
18,000 |
|
|
Estate Principal |
241,700 |
|
|
Estate Income |
5,800 |
|
|
Assets Subsequently Discovered |
28,250 |
|
|
Gain on Realization of Principal Assets |
24,000 |
|
|
Funeral and Administrative Expenses |
8,500 |
|
|
Debts of Decedent Paid |
20,100 |
|
|
Expenses Chargeable against Principal |
1,100 |
|
|
Total |
299,750 |
299,750 |
1. Record the payment to the executor and the transfer of all remaining assets to the trustee.
2. Prepare journal entries to close the executor’s records.
3. Prepare journal entries to record receipt of assets by the trustee. Explain why it was unnecessary to accrue the interest on the Rapid Transit Corp. bonds to the date of actual transfer.