James Albemarle created a trust fund at the beginning of 2019. 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 $370,000, stocks worth $270,000, and rental property valued at $185,000 to the trustee of this fund. b. Immediately invested cash of $295,000 in bonds issued by the U.S. government. Commissions of $6,500 are paid on this transaction. c. Incurred permanent repairs of $7,700 so that the property can be rented. Payment is made immediately. d. Received dividends of $5,400. Of this amount, $1,700 had been declared prior to the creation of the trust fund. e. Paid insurance expense of $2,700 on the rental property. f. Received rental income of $8,700. g. Paid $5,400 from the trust for trustee services rendered. h. Conveyed cash of $5,700 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.)
James Albemarle created a trust fund at the beginning of 2019. 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 $370,000, stocks worth $270,000, and rental property valued at $185,000 to the trustee of this fund. b. Immediately invested cash of $295,000 in bonds issued by the U.S. government. Commissions of $6,500 are paid on this transaction. c. Incurred permanent repairs of $7,700 so that the property can be rented. Payment is made immediately. d. Received dividends of $5,400. Of this amount, $1,700 had been declared prior to the creation of the trust fund. e. Paid insurance expense of $2,700 on the rental property. f. Received rental income of $8,700. g. Paid $5,400 from the trust for trustee services rendered. h. Conveyed cash of $5,700 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vipul k
Transcribed Image Text:James Albemarle created a trust fund at the beginning of 2019. 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 $370,000, stocks worth $270,000, and rental property valued at $185,000 to the trustee of
this fund.
b. Immediately invested cash of $295,000 in bonds issued by the U.S. government. Commissions of $6,500 are paid on this
transaction.
c. Incurred permanent repairs of $7,700 so that the property can be rented. Payment is made immediately.
d. Received dividends of $5,400. Of this amount, $1,700 had been declared prior to the creation of the trust fund.
e. Paid insurance expense of $2,700 on the rental property.
f. Received rental income of $8,700.
g. Paid $5,400 from the trust for trustee services rendered.
h. Conveyed cash of $5,700 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.)
No
1
2
3
4
5
Transaction
a.
b-1
b-2
C.
d.
Cash-principal
Investments in stocks
Rental property
Trust principal
Investments in bonds.
Cash-principal
Commission expense-principal
Cash-principal
Repair expense-principal
Cash-principal
Cash-principal
Cash-income
Answer is not complete.
General Journal
Trust principal
Trust income-rental
3000
››
✓
✓
››
✓
✓
✓
✓
✓
✓
Debit
370,000✔
270,000✔
295,000✔
6,500✔
7,700✓
XX
5,400 X
1,700 X
Credit
185,000 X
455,000 x
295,000✔
6,500✔
7,700✓
5,400 x
1,700 X
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