2. The executor of Rose Shield’s estate listed the following properties (at fair
ID: 2569784 • Letter: 2
Question
2.
The executor of Rose Shield’s estate listed the following properties (at fair value):
Cash
$
365,000
Life insurance receivable
265,000
Investments in stocks and bonds
165,000
Rental property
103,000
Personal property
195,000
Following are the transactions that occur in the months following the decedent’s death:
(1) Claims of $93,000 are made against the estate for various debts incurred before the decedent’s death.
(2) Interest of $25,000 is received from bonds held by the estate. Of this amount, $5,500 had been earned prior to death.
(3) Ordinary repairs costing $6,000 are made to the rental property.
(4) All debts ($93,000) are paid.
(5) Stocks recorded in the estate at $22,500 are sold for $32,000 cash.
(6) Rental income of $27,000 is collected. Of this amount, $2,000 had been earned prior to the decedent’s death.
(7) Cash of $7,300 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 $23,000 are paid.
a. 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:
(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
(Enter debits before credits)
1. Record property held by Rose Shields at death.
2. Record liabilities of Rose Shields at death
3. Record receipt of interest income
4. Record ordinary repair expenses made to rental property
5. Record liabilities and obligations of the decedent
6. Record the sale of stock
7. Record receipt of rental income.
8. Record payment made to income beneficiary
9. Record collection made from life insurance policy. (Transaction 9-a.)
10. Record payments made of proceeds from life insurance policy. (Transaction 9-b)
11. Record cost of decedent’s funeral.
1. Record property held by Rose Shields at death.
No 1
Transaction 1
General Journal
Debit
Credit
?
?
?
2. Record liabilities of Rose Shields at death
No 2
Transaction 2
General Journal
Debit
Credit
No journal entry required
3. Record receipt of interest income
No 3
Transaction 3
General Journal
Debit
Credit
?
Cash-income
?
4. Record ordinary repair expenses made to rental property
No 4
Transaction 4
General Journal
Debit
Credit
?
6,000
?
6,000
5. Record liabilities and obligations of the decedent
No 5
Transaction 5
General Journal
Debit
Credit
?
?
6. Record the sale of stock
No 6
Transaction 6
General Journal
Debit
Credit
Cash-principal
32,000
?
22,500
7. Record receipt of rental income.
No 7
Transaction 7
General Journal
Debit
Credit
Cash-income
?
?
?
8. Record payment made to income beneficiary
No 8
Transaction 7
General Journal
Debit
Credit
?
9. Record collection made from life insurance policy. (Transaction 9-a.)
No 9
Transaction
9-a
General Journal
Debit
Credit
?
10. Record payments made of proceeds from life insurance policy. (Transaction 9-b)
No 10
Transaction
10-b
General Journal
Debit
Credit
Legacy-Amanda Blake
265,000
Cash-principal
265,000
11. Record cost of decedent’s funeral.
No 11
Transaction 10
General Journal
Debit
Credit
Funeral expenses
23,000
Cash-principal
23,000
Cash
$
365,000
Life insurance receivable
265,000
Investments in stocks and bonds
165,000
Rental property
103,000
Personal property
195,000
Explanation / Answer
1. Record property held by Rose Shields at death.
No 1
Transaction 1
General Journal
Debit
Credit
Cash
365000
Life insurance receivable
265000
Investments in stocks and bonds
165000
Rental property
103000
195000
Legacy
2. Record liabilities of Rose Shields at death
No 2
Transaction 2
General Journal
Debit
Credit
No journal entry required
3. Record receipt of interest income
No 3
Transaction 3
General Journal
Debit
Credit
Interest Accrued
5500
Interest income
19500
Cash-Income
25000
4. Record ordinary repair expenses made to rental property
No 4
Transaction 4
General Journal
Debit
Credit
Repairs to house
6,000
Cash-Principal
6,000
5. Record liabilities and obligations of the decedent
No 5
Transaction 5
General Journal
Debit
Credit
Debts Payable
93000
Cash-Pricipal
93000
6. Record the sale of stock
No 6
Transaction 6
General Journal
Debit
Credit
Cash-principal
32,000
Stocks
22,500
Gain on Stocks
9500
7. Record receipt of rental income.
No 7
Transaction 7
General Journal
Debit
Credit
Cash-principal
27000
Rental Income
25000
Rent Accrued
2000
8. Record payment made to income beneficiary
No 8
Transaction 7
General Journal
Debit
Credit
Legacy-Jim Arness
7300
Cash-Principal
7300
9. Record collection made from life insurance policy. (Transaction 9-a.)
No 9
Transaction
9-a
General Journal
Debit
Credit
Cash-Principal
265000
Life insurance receivable
265000
10. Record payments made of proceeds from life insurance policy. (Transaction 9-b)
No 10
Transaction
10-b
General Journal
Debit
Credit
Legacy-Amanda Blake
265,000
Cash-principal
265,000
11. Record cost of decedent’s funeral.
No 11
Transaction 10
General Journal
Debit
Credit
Funeral expenses
23,000
Cash-principal
23,000
No 1
Transaction 1
General Journal
Debit
Credit
Cash
365000
Life insurance receivable
265000
Investments in stocks and bonds
165000
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