Chapter 19, Problem 40P

a.

To determine

Prepare the journal entries in the book of L.

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.

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)