Question

he executor of Rose Shield’s estate listed the following properties (at fair value):

Cash	$	315,000
Life insurance receivable		215,000
Investments in stocks and bonds		115,000
Rental property		93,000
Personal property		145,000

Following are the transactions that occur in the months following the decedent’s death:

(1) Claims of $83,000 are made against the estate for various debts incurred before the decedent’s death.

(2) Interest of $15,000 is received from bonds held by the estate. Of this amount, $6,500 had been earned prior to death.

(3) Ordinary repairs costing $7,500 are made to the rental property.

(4) All debts ($83,000) are paid.

(5) Stocks recorded in the estate at $17,500 are sold for $22,000 cash.

(6) Rental income of $17,000 is collected. Of this amount, $3,500 had been earned prior to the decedent’s death.

(7) Cash of $6,300 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 decedent’s will.

(9) Funeral expenses of $13,000 are paid.

Prepare journal entries to record the property held by Ms. Shield’s estate and then each of the above transactions that occur in the months following the decedent’s death:

Prepare in proper form a charge and discharge statement.

Answer 1

a) Calculate the estate principal.
Principal= cash +life insurance +investments +rental property + personal property
= 315000+215000+115000+93000+145000
= 883,000
1. No journal entry is made since claims are not recorded until they are paid
2. Out of the $15,000 from the bonds, $6,500 was earned Prior to death making this amount the principal. Calculate the income and write it in journal entry form.
Income= Total-principal
= $15000-$6500
= 8500
Description	Debit ($)	Credit ($)
Cash—Principal	6,500
Cash—Income	15,000
Assets Subsequently Discovered		6,500
Estate Income		15,000
-3
Description	Debit ($)	Credit ($)
Expenses—Income	7,500
Cash—Income		7,500
-4
Description	Debit	Credit
Total Debts of Decedent	83,000
Cash—Principal		83,000
All liabilities and obligations have been finalized.
-5
Description	Debit ($)	Credit ($)
Cash—Principal	22,000
Investments in Stocks and Bonds		17,500
Gain on Sale of Stocks Principal		4,500
(6) The rental income of $17000 is received from the property. Of this amount, $3,500 was earned before death.
Income = $17000-$3500 = $13500
Description	Debit ($)	Credit ($)
Cash—Principal	3,500
Cash—Income	13,500
Assets Subsequently Discovered		3,500
Estate Income		13,500
-7
Description	Debit ($)	Credit ($)
Legacy—J.A.	6,300
Cash—Income		6,300
-8
Description	Debit ($)	Credit ($)
Cash—Principal	2,15,000
Life Insurance Receivable		2,15,000
Legacy—A.B.	2,15,000
Cash—Principal		2,15,000
-9
Description	Debit ($)	Credit ($)
Funeral Expenses	13,000
Cash—Principal		13,000

b) Prepare a proper charge and discharge statement.
Estate of R. Shields
Charge and Discharge Statement
As to Principal
I charge myself with:
Assets per original inventory		$883,000
Assets Subsequently Discovered:
Interest Receivable	$6,500
Rental Income Receivable	8,500	15,000
Gain on Sale of Stocks		4,500
Total Charges		9,02,500
I credit myself with:
Debts of Decedent	83,000
Funeral Expenses	13,000
Legacy: A. Blake	2,15,000	3,11,000
Estate Principal		$591,500
Estate Principal:
Cash(315,000+6,500+15000-7500+22,000+17,000-6,300+215,000-215,000-13,000-83,000)		$265,700
Investments in Stocks and Bonds		97,500
115,000-17,500
Rental Property		93,000
Personal Property		1,45,000
Estate Principal		$601,200
As to Income
I charge myself with:
Interest Income	$15000
Rental Income	$13,500	$28,500
I credit myself with:
Repair expenses	$7,500
Legacy: J.A.	6,300	13,800
Balance as to Income		$14700
Balance as to Income:
Cash		$14,700