Question

3 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. 58 ints eBook a. James Albemarle transferred cash of $490,000, stocks worth $390,000, and rental property valued at $245,000 to the trustee of this fund. b. Immediately invested cash of $355,000 in bonds issued by the U.S. government. Commissions of $7,400 are paid on this transaction c. Incurred permanent repairs of $8,900 so that the property can be rented. Payment is made immediately. d. Received dividends of $7,800. Of this amount, $2,900 had been declared prior to the creation of the trust fund. e. Paid insurance expense of $3,900 on the rental property. f. Received rental income of $9,900. 9. Paid $7,800 from the trust for trustee services rendered. h. Conveyed cash of $6.900 to Edward Albemarle. Print 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.)

Answer 1

No Transaction 1 а General Ledger Cash - principal A/C Dr Investment in stock A/C Dr Rental property To Trust principal (Being investment in trust prinicipal) Debit($) Credit ($) 490000 390000 245000 1125000 2 b-1 Dr 355000 Investment in bonds A/c To Cash - principal (Being investment in bonds) 355000 3 b-2 Dr 7400 Commission Expense A/C To Cash - principal (Being commission expense) 7400 4 с Dr 8900 Repair expense A/C To Cash - principal (Being repair expense) 8900 5 d Dr Dr 2900 4900 Cash - principal A/C Cash-Income A/C To Trust principal To Trust income (Being receipt of dividend) 2900 4900

6 e Dr 3900 Insurance Expense - Income A/C To Cash Income (Being insurance expense) 3900 7 f Dr 9900 Cash Income A/C To Trust income - rental (Being received rentaal income) 9900 8 8 Dr DI 5850 1950 Trust expense - principal (7800*75%) A/C Trust expense - income (7800*25%) A/C To Cash principal To Cash Income (Being service amount paid) 5850 1950 9 h 6900 Equity income A/C Dr To cash income (Being cash conveyed to edward albmarle) 6900

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