You Are Serving as the Trustee for the Paul Porter

question 2

Essay

You are serving as the trustee for the Paul Porter testamentary income trust.The trust was created by Paul's will.All of his assets were transferred to the trust to cover the living expenses of his wife,Paula.Upon her death,the assets are to be sold,with the proceeds distributed to his brother,Saul.If Saul is not alive when Paula passes,the proceeds are to go to the Porter Scholarship in Business Administration.
The probate court has ruled that all personal effects and household items could be excluded from the estate.All taxes have been paid,and the following assets remain to be transferred to the trust:
$\begin{array}{lcc}\text { Asset } & \text { Cost } & \text { Fair Market Value } \\\text { Cash } & \$ 160,000 & \$ 160,000 \\\text { Certificates of deposit } & 75,000 & 75,000 \\\text { ExTech Company common stock } & 22,000 & 216,000 \\\text { Rentall common stock } & 42,000 & 40,000 \\\text { Lake house (his share) } & 149,000 & 170,000 \\\text { Personal residence (his share) } & 226,000 & 280,000 \\\text { Antique sports car } & 35,000 & 46,000 \\\text { Coin collection } & 7,000 & 12,000\end{array}$
Required:
Prepare the journal entries for the creation of the trust.

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Definitions:

Marginal Utility

The increase in satisfaction or useful value obtained from the consumption of yet another unit of a good or service.

Milkshakes

A sweet, cold beverage made from blending milk, ice cream, and flavorings or sweeteners such as butterscotch, caramel sauce, or chocolate syrup.

French Fries

Refers to the popular side dish made from potatoes that are cut into strips and fried.

Utility

In economics, a measure of the satisfaction or happiness that individuals get from consuming goods and services.