The Following Selected Transactions Affecting the Annuity and Life Income

question 40

Essay

The following selected transactions affecting the Annuity and Life Income Funds of Tremper State University (public) occurred during the current fiscal year.
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a.Upon his death, John Sooner, a local businessman, donates a portfolio of stock with a cost basis of $100,000 and a market value of $125,000.John's wife is to receive an annuity of $8,000 per year for life.Her life expectancy is ten years.An estimated rate of return of 8% yields a present value of $53,681 for the annuity.​
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b.Dividends of $7,500 are received from Life Income Fund investments.​
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c.Annuity fund investments with a book value of $6,000 are sold for $6,500.​
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d.The beneficiary of the life income investments described in part (b) are paid.​
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e.Interest is recorded on the annuity in part (a) and the first annuity payment to John Sooner's wife is made.​
Required:
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Make the journal entries necessary to record the transactions.

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Definitions:

Unloaded States

Conditions where a mechanical or electrical system is not carrying any load or operational stress.

ASE

The National Institute for Automotive Service Excellence, a professional certification group that certifies professionals and shops in the automotive repair and service industry.

Certification Program

A structured program that provides training and assessment, leading to an official certification to verify an individual's competence in a specific field or technology.

Clutches

mechanical devices used to engage and disengage the power transmission from the driving shaft to the driven shaft.