Question: You serve as the trustee for the
You serve as the trustee for the Josephine Frederick testamentary income trust. The trust was created by the will of her late husband, John. Under the terms of John’s will, all assets are transferred to the trust to cover living expenses for his spouse. Upon her demise, trust assets will be sold, with the proceeds distributed to their six children. Each is to receive an equal share.
The probate court ruled that household furnishings and John’s personal effects could be excluded from the estate. The executor has paid all inheritance and income taxes on estate income for the period of estate administration. The estate inventory prepared by John’s estate executor showed the following assets:
REQUIRED:
Prepare the journal entries for the creation of the trust.
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Asset Cost Fair Value Cash $218,220 S218,220 Savings accounts Microsystems common stock Big Casino common stock Vintage sports car Mountain cottage Personal residence 300,000 163,400 300,000 181,500 17,500 400,000 120,000 31,000 39,700 209,900 114,500 457,500
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