Emily Strong Estate Problem

Emily Strong died in an accident on June $30,$ Year $1.$ Her Will provided that all liabilities and expenses were to be paid and that the property was to be distributed as follows:

$1)$ Personal residence to James Strong, widower of Emily Strong.

$2)$ Government of Canada $12\%$ bonds and IBM common stock$$to be retained. All income from the Government of Canada bonds and IBM common stock is to go to James Strong during his lifetime. Upon his death, the residual of the trust will be divided and distributed equally to her two children, Amy and Jeremy.

$3)$ Lunar Corporation $9\%$ bonds, silverware, and jewelry bequeathed to Amy Strong $,$ daughter of Emily Strong.

$4)$ Cash$$a bequest of $$25,000$ to Jeremy Strong, son of Emily.

$5)$ Residue of estate to be divided equally between Emily$$s two children, Amy and Jeremy.

The Will further provided that during the administration period James Strong was to be paid $$1,000$ a month from estate income. Estate and inheritance taxes were to be borne by the residue of the estate. Jeremy Strong was named as executor and trustee.

The following inventory of the decedent$$s property was prepared:

Property Fair Value

Personal residence $$350,000$

Jewelry and silverware $20,000$

First National Bank, chequing account; balance June $30,$ year $1150,000$

$$200,000$ Government of Canada $12\%$ bonds, due Year $20,$ interest payable May $1$ and November $1($includes accrued interest of $$4,000)204,000$

$$20,000$ Lunar Corporation $9\%$ bonds, due Year $10,$ interest payable June $30($received$)$ and December $3120,000$

IBM common stock, $1,000$ shares $220,000$

Dividends receivable on IBM common stock $2,500$

XY Company common stock, $700$ shares $60,000$

Mortgage payable on personal residence $-$ RBC $40,000$

The executor opened an estate chequing account and transferred the decedent$$s chequing account balance to it$.$ Other deposits in the estate chequing account through June $30,$ Year $2,$ were as follows:

Dividends received on IBM common stock

July $15,$ year $1,$ declared May $7,$ Year $1,$ payable to holders of record May $27,$ year $12,500$

Net proceeds of July $19,$ Year $1,$ sale of $700$ shares of XY Company common stock $54,405$

Dividends received on IBM common stock

September $15,$ Year $12,000$

December $15,$ Year $12,400$

March $15,$ Year $23,000$

Interest received on $$200,000$ Government of Canada $12\%$ bonds

November $1,$ Year $1$ $$12,000$

Interest received on $$200,000$ Government of Canada $12\%$ bonds

May $1,$ Year $212,000$

Payments were made from the estate$$s chequing account through June $30,$ Year $2,$ for the following items:

Liabilities of decedent paid $($including funeral expenses and mortgage$)$ $$112,000$

Additional prior years$$ federal and provincial income taxes, plus interest, to June $30,$ Year $15,210$

Year $1$ income taxes of Emily Strong for the period January $1,$ Year $1$ through June $30,$ Year $18,100$

Federal and provincial estate income taxes, fiscal year ending June $30,$ Year $2.($Allocated entirely to principal$)3,200$

Monthly payments to James Strong, $12$ payments of $$1,00012,000$

Estate administration fees $($allocated entirely to principal$)26,000$

The following properties were distributed to date $($a$)$ the personal residence to James Strong; $($b$)$ the Lunar bonds, silverware, and jewelry to Amy, and $($c$)$ $$25,000$ cash to Jeremy.

Required:

$1.$ Prepare the journal entries to record the transactions and close the accounts.

$2.$ Prepare a Charge and Discharge Statement for both principal and income. In accordance with the Will, the executor accrued the interest and dividends on the estate investments to June $30,$ Year $2.($Note: There is a balance remaining in both principal and income at June $30,$ Year $2.)$