ADVANCED ACCOUNTING W/CONNECT>CUSTOM<
18th Edition
ISBN: 9781307126402
Author: Hoyle
Publisher: MCG/CREATE
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Question
Chapter 19, Problem 40P
a.
To determine
Prepare the
a.
Expert Solution
Explanation of Solution
Journal entries in the book of L.
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
Cash – principal | 19,000 | |||
Certificate of deposit | 90,000 | |||
Dividend receivable | 3,000 | |||
Life insurance policy | 450,000 | |||
(1) | Residence and personal effects | 470,000 | ||
Shares of ford motor company | 72,000 | |||
Shares of Xerox company | 97,000 | |||
Estate principal | 1,201,000 | |||
(To record the Discovered assets at fair value) | ||||
(2) | Cash – principal | 450,000 | ||
Life insurance policy | 450,000 | |||
(To record the collection received from life insurance policy) | ||||
(3) | Cash – principal | 3,000 | ||
Cash – income | 1,000 | |||
Dividend receivable | 3,000 | |||
Estate income (dividend) | 1,000 | |||
(To record the dividend received and distributed between income and principal) | ||||
(4) | No entry | - | ||
(Debt is recorded at the time of payment) | ||||
(5) | Legacy – Sue Pope | 470,000 | ||
Residence and personal effects | 470,000 | |||
(To record the residence and personal effects conveyed to Sue Pope) | ||||
(6) | Land | 15,000 | ||
Assets subsequently discovered (estate principal) | 15,000 | |||
(To record a discovered saving account) | ||||
(7) | Debt of the decedent | 108,000 | ||
Cash – principal | 108,000 | |||
(To record the payment of debt) | ||||
(8) | Funeral expenses | 31,000 | ||
Cash – principal | 31,000 | |||
(To record the Funeral expenses paid) | ||||
(9) | Legacy – Ned Pope | 110,000 | ||
Cash – principal | 110,000 | |||
(To record the cash conveyed to Ned Pope) | ||||
(10) | Cash – principal | 81,000 | ||
Shares of ford motor company | 81,000 | |||
(To record the sale of ford shares) | ||||
(11) | Administration expenses | 16,000 | ||
Cash – principal | 16,000 | |||
(To record the administration expenses paid) | ||||
(12) | Legacy – Harwood Pope | 81,000 | ||
Cash – principal | 81,000 | |||
(To record the cash received from sale of ford shares conveyed to Harwood pope) | ||||
Charitable remainder trust | 300,000 | |||
Cash – principal | 300,000 | |||
(To record the cash transfer to charitable remainder trust) | ||||
Cash – principal | 97,000 | |||
Shares of Xerox company | 97,000 | |||
(To record the Sale the shares of Xerox to fulfill the specific legacy) | ||||
Cash – principal | 105,000 | |||
Certificate of deposit | 90,000 | |||
Land | 15,000 | |||
(To record the liquidation of all the reaming assets) | ||||
Legacy – V | 109,000 | |||
Cash – principal | 109,000 | |||
(To record the distribution of remaining assets transferred to V) | ||||
Table: (1)
Working note:
Calculation of closing cash balance before the payment to V:
Particulars | Amount |
Receipt: | |
Estate principal | $ 19,000 |
Life insurance policy | $ 450,000 |
Dividend | $ 3,000 |
Sales of Xerox shares | $ 97,000 |
Sale of ford shares | $ 81,000 |
Certificate of deposit | $ 90,000 |
Land | $ 15,000 |
Total | $ 755,000 |
Payment: | |
Debt | $ 108,000 |
Funeral expense | $ 31,000 |
Ned pope | $ 110,000 |
Administration expense | $ 16,000 |
Conveyed to Harwood Pope | $ 81,000 |
Charitable remainder fund | $ 300,000 |
Total | $ 646,000 |
Closing balance | $ 109,000 |
Table: (2)
The general legacy of fund transfer to charitable trust cannot be fulfilled as the cash is short for fulfilling the legacy so in order to satisfy the legacy the residual asset shares of Xerox Corporation are sold and cash generated is used for satisfying the general legacy.
It is assumed that the shares are sold at par value.
b.
To determine
Prepare the charge and discharge statement of L.
b.
Expert Solution
Explanation of Solution
Charge and discharge statement of L:
ESTATE OF L | ||
Charge and Discharge Statement | ||
Particulars | Amount | Amount |
AS TO PRINCIPAL | ||
I charge myself with: | ||
Assets as per original inventory | $ 1,201,000 | |
Land | $ 15,000 | |
Gain on sale of shares | $ 9,000 | |
Total charge | $ 1,225,000 | |
I credit myself with: | ||
Debt | $ 108,000 | |
Funeral and administration expenses | $ 47,000 | |
Legacies: | ||
Mr. S | $ 470,000 | |
Mr. N | $ 110,000 | |
Mr. H | $ 81,000 | |
Charitable trust remainder | $ 300,000 | |
Ms. V | $ 109,000 | |
Total credit | $ 1,225,000 | |
Balance as per principal | ||
Cash- principal | $ - | |
AS TO INCOME | ||
I charge myself with: | ||
Dividend income | $ 1,000 | |
Total charge | $ 1,000 | |
I credit myself with: | ||
Total credit | ||
Balance as per income | ||
Cash- income | $ 1,000 |
Table: (3)
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Chapter 19 Solutions
ADVANCED ACCOUNTING W/CONNECT>CUSTOM<
Ch. 19 - Prob. 1QCh. 19 - Prob. 2QCh. 19 - Prob. 3QCh. 19 - Prob. 4QCh. 19 - Prob. 5QCh. 19 - Prob. 6QCh. 19 - Prob. 7QCh. 19 - Prob. 8QCh. 19 - What claims against an estate have priority?Ch. 19 - Prob. 10Q
Ch. 19 - Prob. 11QCh. 19 - Prob. 12QCh. 19 - Prob. 13QCh. 19 - How is the federal estate tax computed?Ch. 19 - Prob. 15QCh. 19 - Prob. 16QCh. 19 - Prob. 17QCh. 19 - Prob. 18QCh. 19 - Prob. 19QCh. 19 - Prob. 20QCh. 19 - Prob. 21QCh. 19 - Prob. 22QCh. 19 - Prob. 23QCh. 19 - Prob. 24QCh. 19 - Prob. 25QCh. 19 - Prob. 26QCh. 19 - Prob. 27QCh. 19 - Prob. 28QCh. 19 - Prob. 29QCh. 19 - Prob. 30QCh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Prob. 5PCh. 19 - Prob. 6PCh. 19 - Prob. 7PCh. 19 - Prob. 8PCh. 19 - Prob. 9PCh. 19 - Prob. 10PCh. 19 - Which of the following is a specific legacy? a....Ch. 19 - Prob. 12PCh. 19 - Prob. 13PCh. 19 - Prob. 14PCh. 19 - Prob. 15PCh. 19 - Prob. 16PCh. 19 - Prob. 17PCh. 19 - Prob. 18PCh. 19 - Prob. 19PCh. 19 - Prob. 20PCh. 19 - Prob. 21PCh. 19 - Prob. 22PCh. 19 - Prob. 23PCh. 19 - Prob. 24PCh. 19 - Prob. 25PCh. 19 - Prob. 26PCh. 19 - Prob. 27PCh. 19 - Prob. 28PCh. 19 - Prob. 29PCh. 19 - Prob. 30PCh. 19 - Prob. 31PCh. 19 - Prob. 32PCh. 19 - Prob. 33PCh. 19 - Prob. 34PCh. 19 - Prob. 35PCh. 19 - Prob. 36PCh. 19 - Prob. 37PCh. 19 - Prob. 38PCh. 19 - Prob. 39PCh. 19 - Prob. 40PCh. 19 - Prob. 41PCh. 19 - Prob. 42PCh. 19 - Prob. 1DYSCh. 19 - Prob. 2DYSCh. 19 - Prob. 3DYSCh. 19 - Prob. 4DYSCh. 19 - Prob. 5DYS
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