Oscar Lloyd Is Serving as the Executor for the Estate

question 16

Essay

Oscar Lloyd is serving as the executor for the estate of Dixie Cooper,who passed away on January 28,2014,at the age of 98.Dixie's estate consisted of Treasury bonds with a maturity value and fair market value of $1,400,000,$4,000 in her checking account,and $50,000 in a Certificate of Deposit with First State Bank of Springfield.Total accrued interest at the time of death was $44,000,made up of $2,000 from the CD and $42,000 from the bonds.
Dixie left a valid will,which provided that most of her estate would be inherited by her two nephews,Jimmy Johns and Joey Johns.In addition,Dixie provided that $200,000 be transferred to a trust account for her faithful cats,Petra and Hobbes.Income from the trust would be used to care for Hobbes and Petra.Upon their passing,the remaining funds would then transfer to Operation Kindness,an organization that cares for cats and dogs.
Mr.Lloyd will also serve as the fiduciary for the trust.He has determined that no state or federal inheritance taxes are due.The limited estate income is also free from any federal or state income tax.The following transactions occurred during February.
1.On February 3,Oscar sold the treasury bonds for $1,460,000.$1,400,000 was for the fair market value of the bonds,$42,000 was for interest accrued to the time of Dixie's death,and the remaining $18,000 was for accrued interest since Dixie's death.Estate income will be used to pay final medical expenses,and if anything is left,funeral expenses.
2.On February 11,Oscar issued a check to pay Dixie's final medical expenses of $11,900.
3.On February 15,Oscar received a check in the amount of $52,000 from First State Bank of Springfield.It is the maturity value and interest from a certificate of deposit in the amount of $50,000.The CD matured on January 22,2014.
4.In Dixie's will,she wanted to give $150,000 to the American Humane Society.After examining the assets,Oscar determined that the estate's assets will adequately cover all expenses and specific devises,so on February 3,he issued a check to the organization for $150,000.
5.On February 18,Oscar transferred $200,000 to a trust account at First State Bank to fund the trust,to care for the cats.
6.On February 25,Oscar issued a check to pay Dixie's funeral expenses of $9,800.
7.On February 26,Oscar paid himself the $4,000 executor's fee specified in Dixie's will.
Assume that on February 28,2014,Oscar finalized the estate and transferred the balance of the estate assets to Dixie's nephews,Jimmy Johns and Joey Johns.Each received one-half of the residual estate.
Required:
1.Prepare the closing entry on February 28,2014.
2.Prepare the charge-discharge statement for the estate of Dixie Cooper for the period January 28 through February 28,2014.

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Definitions:

Initial Value Method

Initial Value Method is an accounting approach where investments are recorded at their purchase cost, without subsequent adjustments for changes in fair value.

Consolidated Net Income

The total net income of a parent company and its subsidiaries after adjusting for intercompany transactions.

Intra-Entity Transfers

Transactions involving the transfer of goods, services, or resources between divisions or entities within the same company.

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and taxes.