Background

?Trust Fund Worksheet BackgroundAn inter vivos trust was created by Isaac Posney. Isaac owned a large department store in Juggins, Utah. Adjacent to the store, Isaac also owned a tract of land that was used as an extra parking lot when the store was having a sale or during the Christmas season. Isaac expected the land to appreciate in value and eventually be sold for an office complex or additional stores. Isaac placed the land into a charitable lead trust, which would hold the land for ten years until Isaac's son would turn 21. At that time, title would be transferred to the son. The store will pay rent to use the land during the interim. The income generated each year from this usage will be given to a local church. The land was currently valued at $416,000.During the first year of this arrangement, the trustee recorded the following cash transactions:Cash inflow:Rental income$78,000Cash outflows:Insurance$ 5,200Property taxes7,800Paving (considered an extraordinary repair)5,600Maintenance10,400Distribution to income beneficiary39,000InstructionsPrepare all required journal entries on the Trust Fund table for this trust fund including the entry to create the trust. Land Trust – Principal Cash – Income Trust – Income Insurance Expense – Income Cash – IncomeProperty Taxes Expense – Income Cash – IncomeLand Improvements Cash – IncomeDue from Trust – Principal Due to Trust – Income Maintenance Expense – Income Cash – IncomeEquity in Income: Beneficiary Cash – Income ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download