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1. When executor takes possession:

Real Estate and Mortgages (on Form 32f)..... $.......
Inventory (on Form 32a).....

$......

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1 No column is needed on the form for the credit entry of payment of the mort gage or sale of the property, which is noted by indorsement on the face of the form.

4. When real estate is sold at a profit:

Cash (on Form 32h)...

Increase (on Form 32a)...........

Real Estate and Mortgages (on Form
32f)'.

Miscellaneous Assets (§692).

1. When executor takes possession:

$.......

$......

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It is believed that from these common entries it will be plain how to handle other transactions which may arise.

§ 695. Making Up the Final Acccount

When the time has arrived for the executor to make up his final account of proceedings, he will find that by taking from Form 32a the inventory, and by charging himself with that,

2 No column is needed on the form for the credit entry of payment of the mortgage or sale of the property, which is noted by indorsement on the face of the form. The distribution of any other assets is handled in the same manner, the proper sset account being credited.

he has the first schedule of his account complete; or if the estate is large enough to make it worth while to subdivide the inventory into the different kinds of property he may make a separate schedule of each of the asset schedules, to-wit: Forms 32b, Bank Balances; 32c, Stocks; 32d, Bonds; 32e, Accrued Receivables; 32f, Real Estate and Mortgages; and 32g, Miscellaneous. Many trust companies, like individual fiduciaries (see § 650), combine all the assets into two accounts, Cash and Investments.

The

The corpus credit schedules may be made up directly from the three credit columns of Form 32h, Administration Expense, Debts, and Legacies. In this way the entire accounting is made without trouble, without danger about proving at the end of the work, and without having to make an analysis of the events which took place at the beginning of the administration period, now passed from the memory of the executor. corpus balance on hand as shown by the account of proceedings will be the same as the balance of the estate as shown on Form 32a. It therefore follows that if the bookkeeping during the administration period has been correct (and if a bank or trust company is the executor or administrator it almost certainly will be), the account is bound to be correct. With these forms used as outlined herein, any bookkeeper can make up the account without difficulty. The one thing which must receive careful attention in all fiduciary accounting is the analysis of the entries at the time they are originally made.

§ 696. Accounting for Income

Income and expenses against income are handled through Form 32j, at the top of which provision is made for showing the capacity in which the institution is acting, the names and addresses of beneficiaries, and the distributive shares and rates of income each is to receive. There is also provided a space for the method of remitting, such as by check once a

month, by cable, or otherwise. On the upper right-hand side is provided a place for the name of the trust or account, the amount of commission, the rate of commission, and when deductible.

The debits are payments either to beneficiaries or for expenses against and losses of income. Those debits which appear in the column headed Deductions are such as may be deducted from the income of the estate for federal income tax purposes, the law of which was kept in mind in the designing of the form.

The credit side of the sheet is separated into the various kinds of income. The analysis is likewise based on the federal income tax requirements, and is so planned as to facilitate the making up of the federal income tax returns. The form could, of course, have been drawn up so as to give a more detailed analysis, but such an increase in the number of columns required could very easily make the accounting system impracticable and unwieldy. It will be found that this form will take care of the great majority of cases very nicely.

In the preparation of the immediate and final accountings for income the executor charges himself with the credits from this sheet, and gives himself credit for the debits, as with any other system. (See § 636.)

§ 697. Other Records Kept

Form 32k, known as the "Personal Trust Department Record," is used for recording the facts about the estate and for noting the events that are to take place during the course of administration. In order to call attention at the proper time to those various items the doing of which is extremely important to the proper performance of the duties of an executor, a complete card index or tickler is a necessary part of the equipment of a trust department. The cards should be filed by dates so as to bring these matters before the person in

charge of the work in ample time, so that they may be taken care of in due course.

REVIEW QUESTIONS

1. What is the advantage of having a separate set of books for each estate? Why is it not feasible for trust companies and banks? What is done to meet this situation?

2. What is the control sheet? What entries are made on the sheet? What is the first entry?

3. What is the purpose of the bank balance schedule? What goes into the credit column? What is the debit column and what goes into it?

4. What is the purpose of the stocks schedule? How is it arranged to accomplish this end? How are the entries made?

5. What is the purpose of the investments schedule? How are the entries made?

6. What is the object of the accrued receivables schedule? What is included in this class of assets?

7. What assets are recorded on the real estate and mortgage schedule? How will a bond and mortgage be entered? What details should appear on the record? How is the schedule used for real estate?

8. What is the miscellaneous schedule used for?

9. What assets are considered cash? What are the successive entries made to show a bank balance? If real estate were sold for cash, what would the entries be? What are the three debit columns for? What are the three credit columns for? 10. In making up the final account, what would be charged to the executor? Into what two accounts could this charge be divided? Into what six accounts? Which are the three credit schedules? What are the advantages of the procedure outlined? What is necessary to ensure correctness?

11. What is shown in the Cash Income account? What are the debit entries? What are the credit entries? How is the accounting for income prepared?

12. What is the purpose of the personal trust department record?

What is a tickler and how is it used?

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