Prepare all required journal entries on the Trust Fund table for this trust fund including the entry to create the trust.
Prepare all required journal entries on the Trust Fund table for this trust fund including the entry to create the trust.
ACC497 v12 Week 5 Apply
Trust Fund Worksheet
Background
An 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.
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During the first year of this arrangement, the trustee recorded the following cash transactions:
Cash inflow:
Rental income
$78,000
Cash outflows:
Insurance
$ 5,200
Property taxes
7,800
Paving (considered an extraordinary repair)
5,600
Maintenance
10,400
Distribution to income beneficiary
39,000
Instructions
Prepare 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 – Income
Property Taxes Expense – Income
Cash – Income
Land Improvements
Cash – Income
Due from Trust – Principal
Due to Trust – Income
Maintenance Expense – Income
Cash – Income
Equity in Income: Beneficiary
Cash – Income
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