Chapter 19, Problem 37P

a.

To determine

Pass journal entries to record the property held by Ms. S’s estate and then each of the given transaction that occurs in the months following the decedent’s death.

Explanation of Solution

The following journal entries to be made by Ms. S’s estate for the given transaction:

Date	Accounts title and Explanation	Post Ref.	Debit ($)	Credit ($)
a.	For recording claims of $80,000 for various debts:
	(Entry is made only at the time of actual payment)
b.	Interest Income:
	Cash-principal		5,000
	Cash-Income		7,000
	Interest Receivable on Bonds			5,000
	Estate Income			7,000
	(Being out of total $12,000 interest income received $5,000 had been earned prior to death)
c.	Ordinary Repairs Paid:
	Estate Income ordinary Repairs		6,000
	Cash-Income			6,000
	(Being repairs costing $6,000 towards rental property is paid)
d.	All debts paid:
	Debts of the decent		80,000
	Cash-Principal			80,000
	(Being all the debt prior to death are paid off)
e.	Cash principal		19,000
	Stock			16,000
	Gain on Realization Principal			3,000
	(Being stock recorded at $16,000 sold at $19,000)
f.	Rental Income:
	Cash-principal		2,000
	Cash-Income		12,000
	Rental Income Receivable on Property			2,000
	Estate Income			12,000
	(Being out of $14,000 rental income $12,000 had been earned prior to death as decent realized)
g.	Cash distributed to Ms. J:
	Legacy-Ms. J		6,000
	Cash principal			6,000
	(Being cash distributed to Ms. J as beneficiary)
h.	Distribution of life Insurance policy collection to Ms. A:-
	Cash-principal		200,000
	Life Insurance policy Receivable			200,000
	Distribution:
	Legacy to Ms. A		200,000
	Cash principal			200,000
	(Being proceeds as life insurance distributed as specified in will
i.	Funeral Expenses Paid:
	Funeral Expenses		10,000
	Cash principal			10,000
	(Being Funeral Expenses are paid)
j.	Principal Assets transferred to trustee:
	Principal Assets transferred to trustee		534,000
	Cash principal			230,000
	Personal Property			130,000
	Rental Property			90,000
	Investment in Stock $\left(\$100000-\$16000\right)$			84,000
	(Being remaining assets transferred to the trustee)

Table: (1)

b.

To determine

Prepare the charge and discharge statement.

Explanation of Solution

The charge and discharge statement is as follows:

Estate of R Charge and discharge statement
Principal	Amount($)	Amount($)
As to Principle
Change myself with:
Estate Principle		820,000
Gain on sale of Stock		3,000
Total Charge		823,000
Credited myself with:
Debts	80,000
Funeral Expenses	10,000
Legacies Distributed:
Ms. J (Cash)	6,000
Ms. A(Life insurance policy proceeding)	200,000
Total		206,000
Total Credits		296,000
Estate Principal		527,000
Estate Principal
Cash		230,000
Investment in Stock $\left(\$1,00,000-\$16,000\text{ sold}\right)$		84,000
Rental Property		90,000
Personal Property		130,000
As to Income
Change myself with:
Interest income		7,000
Rental Income		12,000
Total charge		19,000
Credit myself with:
Repair Expenses		6,000
Balance as to Income		13,000

Table: (2)

Working Note:-

Principal Estate Calculation:

$\begin{array}{c}\text{Principal}\text{estate}\text{=}\text{Cash}\text{+}\text{Life}\text{Insurance}\text{+}\text{Rental}\text{Property}\text{+}\text{Personal}\text{Property}\\ =\$300,000+\$200,000+\$90,000+\$130,000\\ =\$820,000\end{array}$