Chapter 22 Test Bank Estates and Trusts: ©2009 Pearson Education, Inc. Publishing As Prentice Hall 22-1

Chapter 22 Test Bank
ESTATES and TRUSTS
Multiple Choice Questions

1.
Which of the following phrases is frequently used to refer to

estate or trust accounting?
a.
b.
c.
d.
2.
Non-profit accounting.
Testamentary accounting.
Fiduciary accounting.
All of the above phrases are used to refer to estate or
trust accounting.
In reference to accounting for trusts or estates, which of the

following statements is correct?
a. Estates are subject to taxation, but trusts are not.
b. Estates are subject to probate laws that vary widely across
the fifty states.
c. Estates are subject to income taxes at the federal level,
but not at the state level.
d. All of the above are correct.
3.
In reference to estates, which of the following statements is

correct?
a. An estate comes into existence at the death of an
individual.
b. If the deceased person had a valid will at the time of
death, he or she is said to have died intestate.
c. If the deceased person did not have a valid will at the
time of death, he or she is said to have died testate.
d. None of the above statements is correct.
4.
Under the Uniform Probate Code the term personal representative

refers to which of the following?
a.
b.
c.
d.
An executor, but not an administrator.

An administrator, but not an executor.
Neither an executor nor an administrator.
Either an executor or an administrator.
2009 Pearson Education, Inc. publishing as Prentice Hall

22-1
5.
In reference to the probate process, which of the following

statements is correct?
a. The personal representative of the deceased can file a
petition with the appropriate probate court requesting that
an existing will be probated.
b. All states have adopted the Uniform Probate Code.
c. The American Bar Association was solely responsible for
writing the Uniform Probate Code.
d. All of the above statements are correct.
6.
Under the Uniform Probate Code, the personal representative

must inform the heirs and devisees of his or her appointment
and provide other selected information within how many days of
the appointment?
a.
b.
c.
d.
7.
A general devise.
A specific devise.
A testamentary allocation.
An administrative devise
Under the amended Uniform Probate Code, if the decedent dies

intestate, and if there are descendants from a prior marriage
or relationship, the surviving spouse receives what?
a.
b.
c.
d.
9.
days.
days
days.
days.
Which of the following is a gift of an object to a devisee?

a.
b.
c.
d.
8.
10
20
30
60
$25,000 and 2/3 of the remaining intestate estate.

The executor or administrator of a will is required to prepare

and file an inventory of property owned by the deceased within
what time period?
a.
b.
c.
d.
One month of appointment.

Two months of appointment.
Three months of appointment.
45 days of appointment.

22-2
10.
In reference to the Uniform Probate Code, which of the

a. The Code entitles the surviving spouse to a homestead
exemption that is exempt from, and has priority over, all
claims against the estate.
b. The Code provides a homestead exemption to the surviving
spouse of $15,000 in all states.
c. The Code provides a uniform entitlement of $12,500 in
household furniture and other personal effects in all
states.
11.
Under the Uniform Probate Code, the personal representative

must publish for what time period a notice in a newspaper of
general circulation in the county in which the decedent
resided?
a.
b.
c.
d.
12.
For
For
For
For
one week.
two weeks.
three weeks.
five weeks.
If estate assets are insufficient to pay all claims in full,

under the Uniform Probate Code which of the following would be
paid first?
a. Reasonable funeral expenses.
b. Necessary medical and hospital expenses of the last illness
of the decedent.
c. Unsecured debts.
d. The costs and expenses of administration of the estate.
13.
Which of the following are entitled to the remainder of the

estate after all other rightful claims on the estate have been
satisfied?
a.
b.
c.
d.
Remainder beneficiaries.
Residual beneficiaries.
Alternate beneficiaries.
Secondary beneficiaries.

22-3
14.
In reference to estate principal and income, which of the

a. A primary reason for dividing estate principal and estate
income is that the beneficiaries are often different.
b. In accounting for the decedents estate, the receipts due
but unpaid at the date of death are considered estate
principal.
c. After death, earnings from income-producing property are
estate income, unless the will specifically provides
otherwise.
15.
Under the Revised Uniform Principal and Income Act, as amended

in 2006, which of the following expenses incurred in settling
the decedents estate would be charged against the income of
the estate, and not the estates principal?
a.
b.
c.
d.
16.
What is the document prepared by the executor or administrator

to show accountability for estate property received and
maintained or disbursed in accordance with the will?
a.
b.
c.
d.
17.
Funeral expenses.
Attorneys fees.
Estate taxes.
All of the expenses would be charged against the principal
of the estate.
The
The
The
The
Administrator/Executors Fiduciary Report.

charge-discharge statement.
Administrator/Executors Testamentary Report.
Administrator/Executors Principal/Income Report.
Which type of trust is created pursuant to a will?

a.
b.
c.
d.
A
A
A
A
testamentary trust.
Crummey trust.
generation-skipping trust.
life estate trust.

22-4
18.
In reference to the potential taxation of an estate, which of

the following statements is correct?
a. An estate may be subject to taxation at both the state and
federal level.
b. The taxable amount of an estate is based on the book values
of all estate assets at the time of death.
c. The estate value is not reduced by such expenses as funeral
expenses, bequests to qualified charities, or state-level
taxes.
19.
What is the current annual gift amount that can be left to an

individual donee, without being subject to a potential gift
tax?
a.
b.
c.
d.
20.
$7,500.
$12,000.
$17,500.
$20,000.
What is the dollar amount of the federal lifetime maximum gift

tax exclusion?
a.
b.
c.
d.
$24,000.
$600,000.
$1,000,000.
$2,000,000.

22-5
Exercise One
A client has asked you to address the ramifications of having prepared
a valid will prior to death. Discuss the initial process that her
survivors would face if she either has a valid will or if she dies
without preparing a valid will.
Exercise Two
You are serving as the executor for the estate of Dr. John Carrell.
The following transactions occur during the February, 2009. Dr.
Carrell died on January 25, 2009.
1.
In Johns will, he included a bequest to the American Society for

the Prevention of Cruelty to Animals (ASPCA) for $125,000. After
examining the assets, you determined that the estates assets
will adequately cover all expenses and specific devises, so on
February 3, you issued a check to the ASPCA for $125,000.
2.
On February 11, you issued a check to pay Johns final medical

expenses of $31,500.
3.
On February 15, you received a check in the amount of $52,500

from First State Bank of Denton. It is the maturity value and
interest from a certificate of deposit in the amount of $50,000
that was not included in the estates initial inventory. The CD
matured on January 22, 2009.
4.
On February 26, you received interest of $3,000 on Denton City

bonds. Interest of $450 was earned after the date of death. The
balance was earned prior to death, and had been accrued. The
bonds were included in the initial inventory.
5.
On February 28, you issued a check to pay Johns funeral expenses

of $9,800.
Required:
Prepare the necessary journal entries for the above transactions. You
may ignore any estate or income taxes.

22-6
Exercise Three
Bill Barker is the executor for the estate of Ruth Johnson. Ruth owned
a home worth $200,000, with a remaining mortgage amount of $80,000,
personal effects worth $8,000, an investment portfolio worth $150,000
on the date of death, and approximately $7,500 in cash in various
accounts. The home was left to her daughter in the valid will that
Ruth had executed prior to her death.
Ruth did not have a surviving spouse, but she did have a minor
daughter, who is independently wealthy after inventing a cutting-edge
software program. The state in which Ruth resided, allows a $15,000
homestead allowance, and a $10,000 personal effects entitlement.
After taking an inventory, and converting all of the assets, except
for the home and the personal effects, into cash, there is $159,000
for Bill to distribute to the appropriate devises, beneficiaries, and
creditors.
Bill has identified the following expenses and bequests:
1.
Her unpaid final medical expenses were $24,000.
2.
Ruth left a bequest of $100,000 to her church.
3.
The costs and expenses of administering the estate were $21,000.
4.
Real estate taxes of $3,600 are past due.
5.
The unpaid funeral expenses were $8,700.
Required:
Prepare a schedule that will list the disbursements of assets. Assume
that the state in which Ruth resided has adopted the Uniform Probate
Code.

22-7
Exercise Four
You are serving as the executor for the estate of Dr. Mary Carlson.
The following transactions occur during the August 2009. Dr. Carlson
died on July 30, 2009.
1.
On August 6, you received interest of $6,000 on State of Colorado

general revenue bonds. Interest of $1,200 was earned after the
date of death. The balance was earned prior to death, and had
been accrued. The bonds were not included in the estates initial
inventory. The maturity value and fair market values of the bond
are $100,000.
2.
On August 11, you issued a check to pay a probate court fee of

$900.
3.
The
estate
included
20,000
shares
of
Baker
Rudolph,
Internationals common stock, valued at $70 per share. On the
date of her death, there were no outstanding dividends
receivable. On August 14, you read that a dividend of $1.50 per
share was declared.
4.
In Marys will,
$175,000. After
estates assets
devises, so on
$175,000.
5.
On August 25, you issued a check to pay Marys final medical

6.
On August 28, you received a check for $30,000 for the common
stock dividends paid by Baker Rudolph, International.
she included a bequest to the National Zoo for

examining the assets, you determined that the
will adequately cover all expenses and specific
August 23, you issued a check to the Zoo for
Required:
may ignore any estate or income taxes.

22-8
Exercise 5
Byron Ratliff has been appointed to serve as the executor of the
estate of Ms. Juanita Davis, who passed away at the age of 104 on
April 5, 2009. Ms. Daviss assets consisted of the following:
Asset
Cash
Money market accounts
Cooper Incorporated common stock
Porsche 911 Carrera
Condominium in Jackson, WY
Personal residence in Hutchinson, KS
Black velvet Elvis paintings collection
City of Alma, AR municipal bonds
Ski boat
Book Value
$20,000
210,000
52,000
120,000
365,000
185,000
19,900
20,000
25,000
Fair Value
$20,000
210,000
205,530
78,000
1,450,000
225,000
92,000
24,000
14,500
The probate court has ruled that any other personal effects may be
excluded from Ms. Daviss estate inventory.

22-9
Exercise Six
Norma Carrell is serving as the executrix for the estate of Dixon
Cooper, who passed away on January 28, 2009, at the age of 98. Dixons
estate consisted of Treasury bonds with a maturity value and fair
market value of $1,400,000, $4,000 in his checking account, and
$50,000 in a certificate of Deposit with First State Bank of Denton.
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.
Dixon left a valid will, which provided that most of his estate would
be inherited by his two nephews, Shelly Williams and Chuck Fuller. In
addition to the bequests for his nephews, Dixon provided that $200,000
be transferred to a trust account for his faithful cats, Houdini and
Maxine. Income from the trust would be used to care for Max and
Houdini. Upon their passing, the remaining funds would then transfer
to Operation Kindness, an organization that cares for cats and dogs.
Ms. Carrell will also serve as the fiduciary for the trust. She 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, Norma sold the treasury bonds for $1,452,000.

$1,400,000 was for the fair market value of the bonds, $42,000
was for interest accrued to the time of Dixons death, and the
remaining $8,000 was for accrued interest since Dixons death.
2.
On February 11, Norma issued a check to pay Dixons final medical

3.
On February 15, Norma received a check in the amount of $52,000

from First State Bank of Denton. It is the maturity value and
interest from a certificate of deposit in the amount of $50,000.
The CD matured on January 22, 2009.
4.
In Dixons will, he included a bequest to the American Humane

Society for $150,000. After examining the assets, Norma
determined that the estates assets will adequately cover all
expenses and specific devises, so on February 3, she issued a
check to the organization for $150,000.
5.
On February 18, Norma transferred $200,000 to a trust account at

First State Bank to fund the trust.
6.
On February 25, Norma issued a check to pay Dixons funeral

expenses of $9,800.
7.
On February 26, Norma paid herself the $4,000 executors fee

specified in Dixons will.

22-10
8.
On February 28, Norma finalized the estate and transferred the

balance of the estates assets equally between Dixons nephews,
Shelly Williams and Chuck Fuller
Required:
1.
Prepare an estate inventory at

the time of Dixons death and
record the necessary journal entries to create the estate.
2.
Prepare journal
during February.
entries
to
record
the
estates
transactions
Exercise Seven
Use the information from Exercise Six above. Assume that on February
28, 2009, Norma finalized the estate and transferred the balance of
the estate assets to Dixons nephews, Chuck Fuller and Shelly
Williams. Each received one-half of the residual estate.
Required:
1.
Prepare the closing entries on February 28, 2009.
2.
Prepare the charge-discharge statement for the estate of Dixon

Cooper for the period January 28 through February 28, 2009.

22-11
Exercise Eight
You are the trustee for the Houdini/Max Trust from the previous
Exercise. The following transactions occurred during 2009. Houdini and
Max are going to live with Norma Carrell, the trustee and devoted cat
lover.
February 18
The Houdini/Max Trust was established at First State

Bank by depositing Dixon Coopers $200,000 bequest.
February 19
$195,000 was deposited into a three-year certificate

of deposit earning 6% a year. Interest is paid semiannually. $5,000 was deposited into a money market
account paying 4% annual interest. Interest is paid
on the average daily balance for the past year.
February 20
Paid $368 for cat food, cat toys, and kitty litter at
Cats R Us.
February 24
Bought assorted cat DVDs for Max and Houdini. The DVDs
were a combination of fish, bird, and squirrel movies.
The cost of the DVDs was $182.
June 25
Bought $405 worth of cat food, toys, and kitty litter.
August 19
Deposited one-half years interest income of $5,850 into

the money market account.
December 22
Bought cat food, cat toys, kitty litter, and Christmas

presents for Houdini and Max. The cost was $722.
Required:
may ignore any tax effects.

22-12
Exercise Nine
You are serving as the trustee for the Clifford Cooper testamentary
income trust. The trust was created by Cliffords will. All of his
assets were transferred to the trust to cover the living expenses of
his wife, Juanita. Upon her death, the assets are to be sold, with the
proceeds distributed to his brother, Edward. If Edward is not alive
when Juanita passes, the proceeds are to go to the Cooper Scholarship
in Journalism.
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:
Asset
Cost
Cash
$260,000
$260,000
120,000
120,000
Carter Company common stock
55,000
345,000
Trump common stock
75,000
15,000
Lake house in the Ozarks

(his share)
149,000
342,000
Personal residence
(his share)
226,000
540,000
Antique sports car
35,000
53,000
7,000
24,000
Certificates of deposit
Coin collection
Fair Market Value
Required:
Prepare the journal entries for the creation of the trust.

22-13
Exercise Ten
Rufus Holt died on May 1, 2009. He left his entire estate, valued at
$6,100,000 to his sole surviving family member, his daughter, Ethel.
Prior to any distribution of assets, Rufuss estate reflected the
following details:
Funeral expenses.....................
$10,200
Executors fees .....................
4,500
Estate liabilities...................
145,000
Final Medical expenses...............
22,100
Required:
a.
Calculate the federal tax on Mr. Holts estate. You may ignore
any state-level inheritance taxes and assume that the federal tax
rate is 45%.

22-14
SOLUTIONS
Multiple Choice Questions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

22-15
Exercise One
When she dies, an estate will come into existence. If she has a valid
will in effect at the time of death, she will have died testate. If
she were to die without a valid will in force, she would die
intestate.
No matter the status upon her death, typically, a probate court will
appoint a personal representative to take control of the estates
assets. If she dies testate, then her representative will be the
executor of her will. In most cases, the decedent chose this person
prior to her death.
If she dies intestate, the court will name the representative, who
will be the administrator of the will. Contrary to popular myth, if
she dies intestate a governmental entity will not receive the assets
of the estate, unless she has no identifiable heirs. Her assets will
eventually be distributed to her surviving heirs. However, if she dies
intestate, the laws of her state will direct the distribution of
assets.
Each state has its own regulations, and a party dying intestate might
not have agreed with the states distribution ratios. For example, the
state might distribute a significant percentage of the estates assets
to the decedents children, when the decedent wanted the entire estate
to be assigned to the spouse.
The decedent might have desired to allocate a portion of the estate to
charities or outside parties not addressed by the states regulations.
By dying intestate, the decedent has relinquished the possibility of a
unique distribution allocation, and has, by default, chosen the
states generic asset allocation.
Other issues arise when the decedent dies intestate. For example, the
probate expenses faced by the estate are often higher, because of the
lack of a valid will. Also, the distribution of the estates assets
will typically take longer, because of the lack of prior decedent
guidance. The court-appointed administrator often takes longer than an
executor chosen by the decedent because of such factors as lack of
familiarity with the decedents assets and devisees, and the
additional documentation that often arises in a distribution plan for
an intestate decedent.

22-16
Exercise Two
1. Devise ASPCA (E, -SE).................
125,000
Cash (-A)........................
2. Medical Expenses (E, -SE)...............
125,000
31,500
Cash (-A)........................
3. Cash Principal (+A)...................
31,500
52,500
Assets subsequently discovered (-A)

4. Cash (+A)...............................
52,500
3,000
Interest receivable (-A).........
2,550
Estate Income (R, +SE)...........
450
5. Funeral Expenses (E, -SE)...............
9,800
Cash (-A)........................

22-17
9,800
Exercise Three
Remaining balance
Beginning cash balance
1.
2.
3.
4.
5.
$159,000
The Uniform Probate Code (UPC) provides

a homestead allowance that takes priority
over all other claims. In Ruths state, it
is $15,000, so the first $15,000 in cash
goes to her minor daughter, since there was
no surviving spouse. The daughter also receives
$8,000 in personal effects, since this also
takes precedence over any other claims.
After the homestead allowance and the
entitlement for personal effects, the
next item to be paid is the costs and
expenses of the estates administration,
which were $21,000
$144,000
123,000
After the costs and expenses of the

estates administration, the next items
to be paid are the expenses of the funeral
and the final medical expenses, which were
$32,700 ($8,700 + $24,000).
90,300
After the expenses of the funeral and

the final medical bills, the next category
would be debts and taxes with preference
under either state or federal law. In Ruths
case, this would be the $3,600 in past-due
real estate taxes.
86,700
After past-due real estate taxes, Ruth does not

have any other outstanding debts. Since no
provisions were made to pay off the mortgage,
and since Ruths daughter appears to be
financially secure, the title to the home is
transferred to her daughter with the remaining
$80,000 mortgage unpaid. If the daughter sells
the home, the sales proceeds will be reduced by the
funds necessary to pay off the loan.
The remaining $86,700 would be distributed to
Ruths church, which would then deplete the
estates funds. The church would not receive
the $13,300 difference between the $100,000
bequest and the actual distribution of $86,700.
$0

22-18
Exercise Four
1. Bond Receivable
(+A)...................
100,000
Interest receivable (+A)................
4,800
Assets subsequently discovered (-A)

Cash (+A)...............................
104,800
6,000
4,800

2. Probate court expenses (E, -SE).........
1,200
900
Cash (-A)........................
3. Dividends receivable (+A)...............
900
30,000
Estate income (R, +SE)...........

4. Devise National Zoo (E, -SE)..........
30,000
175,000
Cash (-A)........................
5. Medical expenses (E, -SE)...............
175,000
27,500
Cash (-A)........................
6. Cash (+A)...............................
27,500
30,000
Dividends Receivable (-A)........

22-19
30,000
Exercise Five
Juanita Davis, Testator

Inventory of Estate Assets
As of the date of Death on April 5, 2009
Description of Property
Fair Value
Cash
$20,000
Money market accounts
210,000
Cooper Incorporated common

stock
205,530
Porsche 911 Carerra

Condominium in Jackson, WY
Personal residence in
Hutchinson, KS
78,000
1,450,000
225,000
Black velvet Elvis paintings

collection
92,000
City of Alma, AR municipal

bonds
24,000
Ski boat
14,500
$2,319,030
Submitted by Byron Ratliff,

executor

22-20
Exercise Six
1. Estate Inventory
Dixon Cooper, Testator
Inventory of Estate Assets
As of the date of death on January 28, 2009
Description of Property
Fair Value
Cash in First State Bank of Denton
$4,000
Certificates of deposit, includes $2,000 accrued

interest
52,000
Treasury bonds
1,400,000
Interest receivable-treasury bonds
42,000
Personal effects*
$1,498,000
*The probate court permitted exclusion of Dixons

personal effects from the estate inventory.
Prepared by Ms. Norma Carrell, Executrix, Denton,
TX
Journal entries to record inventory
Cash-principal (+A)..............
4,000
Certificate of deposit(+A).......
50,000
Treasury bonds receivable (+A). . .

Due July 1, 2016.
1,400,000
Interest receivable-certificate of
deposit
2,000
Interest receivable-treasury bonds
42,000
Estate Principal...........

22-21
1,498,000
2.
Journal entries to record February activities
1. Cash (+A)...............................
1,460,000
Interest receivabletreasury bonds (-A)..............
42,000
18,000
Treasury bonds receivable (-A). . .
1,400,000
2. Medical Expenses (E, -SE)...............
11,900
Cash (-A)........................
3. Cash Principal (+A)...................
11,900
52,000
2,000
Certificate of deposit (-A)......
50,000
4. Devise Am. Humane Soc. (E, -SE).......
150,000
Cash (-A)........................
5. Devise-Houdini/Max trust account (E, -SE)
150,000
200,000
Cash (-A)........................
6. Funeral Expenses (E, -SE)...............
200,000
9,800
Cash (-A)........................
7. Executrix expenses (E, -SE).............
9,800
4,000
Cash (-A)........................
4,000
8. Devise-Shelly Williams (E, -SE).........
570,150
Devise-Chuck Fuller (E, -SE)............
570,150
Cash (-A)........................

22-22
1,140,300
Exercise Seven
1.
Closing Entries
Estate principal (-SE)
1,498,000
Estate income (-R,-SE)
18,000
Funeral expenses (-E,+SE)
9,800
Executrix expenses (-E,+SE)
4,000
Medical expenses (-E, +SE)

Devise Houdini/Maxine Trust
11,900
200,000
(-E,+SE)
Devise American Humane Society
150,000
(-E,+SE)
Devise Shelly Williams
570,150
(-E,+SE)
Devise Chuck Fuller
(-E,+SE)

22-23
570,150
2.
Charge-Discharge Statement
Estate of Dixon Cooper
Charge-Discharge Statement
For the period of estate administration,
January 28 to February 28, 2009
Estate principal
I charge myself for:
Assets included in estate inventory - total
estate principal charge
$1,498,000
I credit myself for:

Funeral expenses paid
9,800
Executrix expenses paid
4,000
Medical expenses paid
11,900
Devise paid in cash to Houdini/Maxine Trust
200,000
Devise paid to American Humane Society
150,000
Devise paid in cash to Shelly Williams
561,150
Devise paid in cash to Chuck Fuller
561,150
Total estate principal discharge
$1,498,000
Estate income
I charge myself for:
Estate income received during estate
administration
$18,000
I credit myself for:

Payment of estate income to Shelly Williams
9,000
Payment of estate income to Chuck Fuller
9,000
$18,000
Respectfully submitted, Norma Carrell, Estate Executrix,

February 28, 2009.

22-24
Exercise Eight
2/18
Cash (+A)............................
200,000
Trust fund principal (+SE).......

2/19
200,000
Money market account (+A)............
5,000
Certificate of deposit (+A)..........
195,000
Cash (-A)........................
2/20
Trust fund expenses (E, -SE).........
200,000
368
Cash (-A)........................
2/24
Trust fund expenses (E, -SE)........
368
182
Cash (-A)........................
6/25
368
405
Cash (-A)........................
8/19
Cash (-A)...........................
405
5,850
Trust fund income................

12/22
5,850
722
Cash (-A)........................

22-25
722
Exercise Nine
Asset
Cash (+A)
260,000
Certificates of deposit (+A)
120,000
Carter Company common stock (+A)
345,000
Trumpe common stock (+A)
15,000
Lake house in the Ozarks (+A)

(his share)
342,000
Personal residence (+A)

(his share)
540,000
Antique sports car (+A)
53,000
Coin collection (+A)
24,000
Trust fund principal (+SE)
1,699,000
To record receipt of property transferred from executor.

22-26
Exercise Ten
Funeral expenses.....................
$10,200
Executors fees .....................
4,500
Estate liabilities...................
145,000
Final Medical expenses...............
22,100
Required:
a.
Calculate the federal tax Mr. Holts estate. You may ignore any
state-level inheritance taxes and assume that the federal tax
rate is 45%.
Fair value of gross estate............
$6,100,000
Executors fees.......................
4,500
Funeral expenses......................
(10,200)
Estate liabilities....................
(145,000)
Final medical expenses................
(22,100)
Estate tax exemption..................
(3,500,000)
Taxable value of estate...............
$2,418,200
Estate tax due (45% of $2,422,700)....
$1,088,190
Ethels net inheritance...............
$5,011,810

22-27

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Chapter 22 Test Bank

ESTATES and TRUSTS

Multiple Choice Questions

Which of the following phrases is frequently used to refer to

In reference to accounting for trusts or estates, which of the

In reference to estates, which of the following statements is

Under the Uniform Probate Code the term personal representative

An executor, but not an administrator.

2009 Pearson Education, Inc. publishing as Prentice Hall

In reference to the probate process, which of the following

Under the Uniform Probate Code, the personal representative

Under the amended Uniform Probate Code, if the decedent dies

Which of the following is a gift of an object to a devisee?

$25,000 and 2/3 of the remaining intestate estate.

The executor or administrator of a will is required to prepare

One month of appointment.

2009 Pearson Education, Inc. publishing as Prentice Hall

In reference to the Uniform Probate Code, which of the

Under the Uniform Probate Code, the personal representative

If estate assets are insufficient to pay all claims in full,

Which of the following are entitled to the remainder of the

2009 Pearson Education, Inc. publishing as Prentice Hall

In reference to estate principal and income, which of the

Under the Revised Uniform Principal and Income Act, as amended

What is the document prepared by the executor or administrator

Administrator/Executors Fiduciary Report.

Which type of trust is created pursuant to a will?

2009 Pearson Education, Inc. publishing as Prentice Hall

In reference to the potential taxation of an estate, which of

What is the current annual gift amount that can be left to an

What is the dollar amount of the federal lifetime maximum gift

2009 Pearson Education, Inc. publishing as Prentice Hall

In Johns will, he included a bequest to the American Society for

On February 11, you issued a check to pay Johns final medical

On February 15, you received a check in the amount of $52,500

On February 26, you received interest of $3,000 on Denton City

On February 28, you issued a check to pay Johns funeral expenses

2009 Pearson Education, Inc. publishing as Prentice Hall

Her unpaid final medical expenses were $24,000.

Ruth left a bequest of $100,000 to her church.

The costs and expenses of administering the estate were $21,000.

Real estate taxes of $3,600 are past due.

The unpaid funeral expenses were $8,700.

2009 Pearson Education, Inc. publishing as Prentice Hall

On August 6, you received interest of $6,000 on State of Colorado

On August 11, you issued a check to pay a probate court fee of

On August 25, you issued a check to pay Marys final medical

she included a bequest to the National Zoo for

2009 Pearson Education, Inc. publishing as Prentice Hall

2009 Pearson Education, Inc. publishing as Prentice Hall

On February 3, Norma sold the treasury bonds for $1,452,000.

On February 11, Norma issued a check to pay Dixons final medical

On February 15, Norma received a check in the amount of $52,000

In Dixons will, he included a bequest to the American Humane

On February 18, Norma transferred $200,000 to a trust account at

On February 25, Norma issued a check to pay Dixons funeral

On February 26, Norma paid herself the $4,000 executors fee

2009 Pearson Education, Inc. publishing as Prentice Hall

On February 28, Norma finalized the estate and transferred the

Prepare an estate inventory at

Prepare the closing entries on February 28, 2009.

Prepare the charge-discharge statement for the estate of Dixon