Problem 1:

Zac Petersons estate reports the following information:

Value of estate assets

Conveyed to spouse
Conveyed to children
Conveyed to trust fund for benefit of
cousin
Conveyed to charities
Funeral expenses
Administrative expenses
Debts
What is the taxable estate value?

Taxable estate

$2,510,000
1,105,000
240,500
552,500
270,500
33,500
51,500
256,500

Problem 2:
During 2014 an estate generated income of $57,500:
Rental income
Interest income
Dividend income

$21,500
18,500
17,500

The interest income is conveyed immediately to the beneficiary stated in the decedents will.
The dividends are given to the decedents church.

What is the taxable income of the estate?

Problem 3:
The executor of Rose Shields estate listed the following properties (at fair value):

Cash
Life insurance receivable
Investments in stocks and bonds
Rental property
Personal property

380,000
280,000
180,000
106,000
210,000

Following are the transactions that occur in the months following the decedents death:
(1)Claims of $96,000 are made against the estate for various debts incurred before the
decedents death.
(2)Interest of $28,000 is received from bonds held by the estate. Of this amount, $7,000 had
been earned prior to death.
(3)Ordinary repairs costing $7,500 are made to the rental property.
(4)All debts ($96,000) are paid.
(5)Stocks recorded in the estate at $24,000 are sold for $35,000 cash.
(6)Rental income of $30,000 is collected. Of this amount, $3,500 had been earned prior to the
decedents death.
(7)Cash of $7,600 is distributed to Jim Arness, an income beneficiary.
(8)The proceeds from the life insurance policy are collected and the money is immediately
distributed to Amanda Blake as specified in the decedents will.
(9)Funeral expenses of $26,000 are paid.

a. Prepare journal entries to record the property held by Ms. Shields estate and then each of the
following transactions that occur in the months following the decedents death. (If no entry
is required for a transaction/event, select "No journal entry required" in the first
account field.)

Record property held by Rose Shields at death.

Record liabilities of Rose Shields at death.
Record receipt of interest income.
Record ordinary repair expenses made to rental property.
Record liabilities and obligations of the decedent.
Record sale of stock and reflect gain on such sale.
Record receipt of rental income.
Record payment made to income beneficiary.
Record collection made from life insurance policy.
Record payments made of proceeds from life insurance policy.

Record cost of decedent's funeral.

Transaction
1
2
3
4
5
6
7
8
9
10
11

General Journal

b. Prepare in proper form a charge and discharge statement.

.
ESTATE OF ROSE SHIELDS
Charge and Discharge Statement
As to Principal
I charge myself with:
Assets subsequently discovered:

Total charges
I credit myself with:

Estate principal
Estate principal:

Debit

credit

Estate principal
As to Income
I charge myself with:

I credit myself with:

Balance as to income
Balance as to income:

Problem 4:
The executor of Gina Purcells estate has recorded the following information:

Assets discovered at death (at fair value):

Cash
Life insurance receivable
Investments:
Walt Disney Company
Polaroid Corporation
Ford Motor Company
Dell Inc.
Rental property
Cash outflows:
Funeral expenses
Executor fees
Ordinary repairs of rental property
Debts
Distribution of income to income beneficiary
Distribution to charitable remainder trust
Cash inflows:
Sale of Polaroid stock
Rental income ($8,500 earned prior to death)
Dividend income ($2,900 declared prior to death)
Life insurance proceeds

690,000
245,000
20,000
36,000
43,000
41,000
390,000

30,000
21,000
2,000
90,000
4,900
345,000

43,500
20,000
21,000
245,000

Debts of $26,000 still remain to be paid. The Dell shares have been conveyed to the
appropriate beneficiary. Assume that Ms. Purcells will stated that all executor fees are to be
paid from principal.
Prepare an interim charge and discharge statement for this estate.

ESTATE OF GINA PURCELL

Charge and Discharge Statement
As to Principal
I charge myself with:

Assets subsequently discovered:

Total charges
I credit myself with:

Estate principal
Estate principal:

Estate principal
As to Income
I charge myself with:

I credit myself with:

Balance as to income
Balance as to income:

Problem 5:
Jerry Taschs will has the following provisions:
$155,000 in cash goes to Thomas Thorne.
All shares of Coca-Cola go to Cindy Phillips.
Residence goes to Kevin Simmons.
All other estate assets are to be liquidated with the resulting cash going to the First
Church of Freedom, Missouri.

a. Discovered the following assets (at fair value):

Cash
Interest receivable
Life insurance policy
Residence
Shares of Coca-Cola Company
Shares of Polaroid Corporation
Shares of Ford Motor Company

$ 81,000
6,100
310,000
210,000
51,000
111,000
145,000

b. Collected interest of $7,200.

c. Paid funeral expenses of $21,000.
d. Discovered debts of $41,000.
e. Located an additional savings account of $13,000.
f. Conveyed title to the residence to Kevin Simmons.
g. Collected life insurance policy.
h. Discovered additional debts of $61,000. Paid debts totaling $102,000.
i. Conveyed cash of $155,000 to appropriate beneficiary.
j. Sold the shares of Polaroid for $114,000.
k. Paid administrative expenses of $11,000.

Prepare journal entries for the above transactions. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
Journal Entry Worksheet

Record property held by Jerry Tasch at death.

Record interest collected.
Record funeral expenses paid.
Record debts discovered.
Record assets subsequently discovered.
Record conveyance of title to the residence to Kevin Simmons.
Record collection of Life insurance policy.
Record payment of debts of decedents.
Record debts discovered.
Record conveyance of cash to Thomas Thorne.
Record sale of shares of Polaroid.
Record administrative expenses.
Transaction
1
2
3
4
5
6
7
8
9
10
11
12

General Journal

Debit

credit

Problem 6:
After the death of Lennie Pope, his will was read. It contained the following provisions:
$100,000 in cash goes to decedents brother, Ned Pope.
Residence and other personal property go to his sister, Sue Pope.
Proceeds from the sale of Ford stock go to uncle, Harwood Pope.
$380,000 goes into a charitable remainder trust.
All other estate assets are to be liquidated with the cash going to Victoria Jones.

a. Prepare journal entries for the following transactions that subsequently occur: (If no entry is
required for a transaction/event, select "No journal entry required" in the first account
field.)

(1) Discovered the following assets (at fair value):

Cash
Certificates of deposit
Dividends receivable
Life insurance policy
Residence and personal effects
Shares of Ford Motor Company
Shares of Xerox Corporation

$ 33,000
98,000
4,900
545,000
565,000
91,000
98,000

(2) Collected life insurance policy.

(3) Collected dividends of $7,800.
(4) Discovered debts of $90,000.
(5) Conveyed title to the residence to Sue Pope along with the decedents personal effects.
(6) Discovered title to land valued at $34,000.
(7) Discovered additional debts of $56,000. Paid all of the debts totaling $146,000.
(8) Paid funeral expenses of $50,000.
(9) Conveyed cash of $100,000 to Ned Pope.
(10) Sold the shares of Ford for $109,500.
(11) Paid administrative expenses of $35,000.
(12) Made the appropriate payment to Harwood Pope.

Problem 7:
James Albemarle created a trust fund at the beginning of 2014. The income from this fund will
go to his son Edward. When Edward reaches the age of 25, the principal of the fund will be
conveyed to United Charities of Cleveland. Mr. Albemarle specified that 75 percent of trustee
fees are to be paid from principal. Terry Jones, CPA, is the trustee.
a. James Albemarle transferred cash of $360,000, stocks worth $260,000, and rental property
valued at $180,000 to the trustee of this fund.
b. Immediately invested cash of $290,000 in bonds issued by the U.S. government.
Commissions of $6,000 are paid on this transaction.
c. Incurred permanent repairs of $7,600 so that the property can be rented. Payment is made
immediately.
d. Received dividends of $5,200. Of this amount, $1,600 had been declared prior to the creation
of the trust fund.
e. Paid insurance expense of $2,600 on the rental property.
f. Received rental income of $8,600.
g. Paid $5,200 from the trust for trustee services rendered.
h. Conveyed cash of $5,600 to Edward Albemarle.

Prepare all necessary journal entries for the trust to record the above transactions. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account
field.)
Journal Entry Worksheet

Record transfer of assets to the fund.

Record purchase of bonds.
Record payment of commission.
Record payment of repair expenses.
Record receipt of dividends.
Record insurance expense on rental property.
Record rental income.
Record payment for trustee services.
Record conveyance of cash to Edward Albemarle.

Problem 8:
Henry ODonnell created an inter vivos trust fund. He owns a large department store in Higgins,
Utah. He also owns a tract of land adjacent to the store used as an extra parking lot when the
store is having a sale and during the Christmas season. ODonnell expects the land to appreciate
in value and eventually be sold for an office complex or additional stores.

ODonnell places this land into a charitable lead trust, which will hold the land for 10 years
until ODonnell's son is 21. At that time, title will transfer 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 is currently valued at $490,000.
During the first year of this arrangement, the trustee records the following cash transactions:

Cash inflows:
Rental income
Cash outflows:
Insurance
Property taxes
Paving (considered an extraordinary
repair)
Maintenance
Distribution to income beneficiary

$77,000
$ 5,700
7,700
5,700
9,700
47,000

Prepare all journal entries for this trust fund including the entry to create the trust. (If no entry
is required for a transaction/event, select "No journal entry required" in the first account
field.)
Journal Entry Worksheet

Record transfer of land to charitable trust.

Record rental income.
Record insurance costs.
Record property taxes.
Record land improvements.
Assuming that the payment has been made from income rather than principal, record the
amount due from the trust principal.
Record maintenance expenses.
Record distribution of income to beneficiary.