• L - " ■ I ■ ; .- r. -. ' 2 ^2 > 2 5i J. i'i i i 1 1 i' i ; : - : - - ■•- - -- - ;■ ; 5 i 5 JJiSJiHl; lillliiiil LIBRARY OF ALLEN KNIGHT CERTIFIED PUBLIC ACCOUNTANT 502 California Street . SAN FRANCISCO. CALIFORNIA i ALI.EN KNIGHT J Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/accountsofexecutOOhardrich StuMee in Bu6tne60 First Series^ No. 2. ACCOUNTS OF EXECUTORS AND TESTAMENTARY TRUSTEES: Lectures before the N ew York Univer- sity School of Commerce, accounts and Finance BY JOSEPH HARDCASTLE, C. P. A., PROFESSOR OF PRIN-" CIPLES AND PRACTICE OF ACCOUNTS, SCHOOL OF COM- MERCE, ACCOUNTS AND FINANCE. NEW YORK UNIVERSITY Publications of the New York University School OF Commerce, Accounts and Finance, New York, 1903. Copyright, 1903, by NEW YORK UNIVRRi N\^ ^% for receipts and 2^% for payments, etc. The total amount of income for the year must be taken as the basis. EXAMPLES. 1. Two trustees collect income for one year for the use of a beneficiary, amounting to $20,000; the expense attending the same amounts to $2,000. With what sum shall the beneficiary be charged for commission, and how much for equal services should each trustee receive on the annual accounting, also how much will be due the beneficiary? Total commission $390, each trustee's commission $195, and amount due beneficiary $18,610. 2. Four trustees receive and pay out of the corpus of an estate $200,000; the debts amount to $50,000. Supposing that their services are equal, what should each trustee receive for commission? Answer — $1,567.50. 3. Executor A receives of corpus of an estate $20,000, and Executor B receives $30,000; they pay out together $40,000. What will be the amount going to the residuary legatees ? What will be the commission of each executor, their services being reckoned in proportion to the amount each executor received? A's commission $276, B's $414. Residuary legatees would re- ceive $9,310. LECTURE IX. investments and realization of property. The trustee should at all times keep the trust fund fully in- invested, and if he neglects to invest within a reasonable time 46 Accounts of Executors he may personally be charged with interest for the unreasona- ble time. He is accountable for all interest actually received arising out of the trust fund, and for all which he might have obtained by due diligence and exercise of ordinary ability. The property being once well invested, the investments should not be changed without good reason; e. g., if the in- vestment has become insecure the estate might suffer loss ; or if it has become unproductive, the beneficiary may be suffering in income. The trustee should not traffic in trust securities, as he thereby endangers the fund, yet if a security has acquired a speculative value much above its par as an investment, the investment should be changed so that the life beneficiary may receive the increase of income to which he is entitled. The two objects which the trustee should have in view are: first, se- curity, to protect the interest of the remainderman; and pro- ductiveness, so that the life beneficiary may receive the cur- rent rate of interest. A testator sometimes provides that his business shall be carried on after his death for a certain time. In such a case it is the trustee's duty so to do, but if the matter is permissive, he should not continue it against his own judgment. A partnership cannot be continued after a change in the firm, nor should the capital be increased. A trustee should never be tempted to hazard the safety of the fund so as to make unusually large returns. The following may be pointed out as unfit investments: Loans on merely personal security, investments on unincor- porated business ventures, partnerships, patents, second mort- gages, and mortgages on leasehold property, unproductive real estate and all investments of an untried or speculative na- ture. INVESTMENT OF TRUST FUNDS IN STATE OF NEW YORK. Section 9, Chapter 295. Laws of 1902. "An executor, ad- ministrator, guardian, trustee or other person holding trust funds for investment may invest the same in the same kind of securities as those in which savings banks of this state are by law authorized to invest the money deposited therein and the income derived therefrom; and in bonds and mortgages on AND Testamentary Trustees. 47 unincumbered real property in this state worth fifty per cent, more than the amount loaned thereon." Sec. 116. Banking Law of 1902. ''In the stocks or bonds 01 interest bearing obligations of the United States, or those for which the United States are pledged to provide for the payment of the interest and principal, including the bonds of the District of Columbia. "In the stocks or bonds or interest bearing obligations of this state, issued pursuant to the authority of any law of the state." "In the stocks or bonds or interest bearing obligations of any state of the United States which has not within ten years previous to making such investment by such corporation de- faulted in the payment of any part of either principal or inter- est of any debt authorized by the legislature of any such state to be contracted ; and in the bonds or interest bearing obliga- tions of any state of the United States, issued in pursuance of the authority of the legislature of such state, which have prior to the passage of this act been issued for the funding or settle- ment of any previous obligation of such state theretobefore in default and on which said funding or settlement obligation there has been no default in the payment of either principal or inter- est, since the issuance of such funded or settlement obligation, and provided the interest on such funded or settlement obliga- tion has been paid regularly for a period not less than ten years next preceding such investments. "In the stocks or bonds of any city, county, town or village, school district bonds, and union free school district bonds issued for school purposes, or in the interest-bearing obliga- tions of any city or county of this state, issued pursuant to the authority of any law of the state for the payment of which the faith and credit of the municipality issuing them are pledged. "In the stocks and bonds of the following cities: Boston, Worcester, Cambridge, Lowell, Fall River, Springfield, and Holyoke, in the State of Massachusetts ; St. Louis, in the State of Missouri ; Cleveland, Cincinnati and Toledo, in the State of Ohio ; Detroit and Grand Rapids, in the State of Michigan ; Providence, in the State of Rhode Island; New Haven and Hartford, in the State of Connecticut ; Portland, in the State of 48 Accounts of Executors Maine; Philadelphia, Pittsburg, Allegheny, Reading and Scranton, in the State of Pennsylvania; Minneapolis and St. Paul, in the State of Minnesota; Des Moines, in the State of Iowa ; Milwaukee, in the State of Wisconsin ; Louisville, in the State of Kentucky; Paterson, Trenton, Newark and Camden, in the State of New Jersey; Baltimore, in the State of Mary- land; Los Angeles, in the State of California. If at any time the indebtedness of any of said cities, less its w^ater debt and sinking fund, shall receive seven per centum of its valuation for the purposes of taxation, its bonds and stocks shall there- after, and until such indebtedness shall be reduced to seven per centum of the valuation for the purposes of taxation, cease to be an authorized investment for the money of savings banks." Also in the securities of certain railroads, for which see Banking Law as amended by the legislature, 1902. REALIZATION OF PROPERTY. Certain property may not come into the hands of the trus- tee immediately on the assumption of the trust, so that the life beneficiary will be deprived of any benefit from it. When this fund is realized it must be so apportioned that the life benefi- ciary will receive income from it at the usual rate of interest from the beginning of the trust and the balance of the fund will go to the corpus. The interest on the portion going to the corpus, from the beginning of the trust to the realization, at the usual rate added to the corpus will give the amount realized. The interest should be compounded from year to year. EXAMPLE. A sum of money, the payment of which is deferred two years after the beginning of the trust, is then received, amount- ing to $10,000 with interest at the rate of 6% per annum. How will the fund be apportioned between corpus and income? So- lution: One dollar at compound interest in two years will amount to $1.1236 and $10,000 divided by $1.1236 gives $8,- 899.96 for the corpus and $1,100.04 for income. If the sum of money was entered in the inventory at $8,- 899.96, then on receipt of the amount cash would be debited AND Testamentary Trustees. 49 $10,000, and the inventory value would be credited $8,899.96 and the income credited $1,100.04. If the inventoried value should be $9,000, then there would be a loss of $100.04 with which personal estate account is debited and the realized account credited. Illustrations. A legacy receivable not immediately received. A sum not received in full. An unsuitable investment sold and converted into a suitable one. Unproductive property. Converted by sale into productive. Property converted because the earnings are greatly in excess of usual interest as in case of business or partnership or on wasting investments. CORPUS AND INCOME DISTINGUISHED. The instrument creating the trust decides conclusively what shall go to the life tenant and what to the remainderman. It is simply a question as to the intention of the creator of the trust. If the trust instrument is silent as to the apportioning of corpus and income, the general rules prevail. 1. If a mortgage held in trust is foreclosed and the land is bought in by one of the trustees, and later sold at an advance, the proceeds, over and above interest on the debt, go to capital (5 Dem. 73). 2. If trust property is destroyed by fire, the insurance money belongs to the corpus (4 Dem. 404), unless the benefi- ciary has paid the insurance premium. 3. A bond which forms part of the property settled on the trustee should be inventoried at par, and if sold the profit on the sale goes to the corpus, but the beneficiary receives the whole of the coupon interest, and as interest is reckoned from day to day, pro rata of the interest uncollected to the date of sale (103 N. Y. 445). If, however, the bonds are purchased at a premium by the trustee, then the nominal interest is apportioned between in- terest and principal, the former going to the income and the latter forming a sinking fund to meet the premium of the bond when the bond matures. In this latter case the rate per cent, the bond is yielding is found from a bond table, such as Price's, etc. 5© Accounts of Executors EXAMPLE. A bond per $ioo, nominal rate 4%, has 2 years to run, is bought for $101.93, yielding the trustee 3% interest, payable semi-annually. Show the steps in the account keeping. Debit the bond account and credit the cash account at purchase $101.93. Half yearly interest at 3% on $101.93 is $1.53, which taken from coupon $2 gives $.47 for sink- ing fund. Now debit cash $2 for coupon received and credit in- come $1.53 for interest, and credit the bond account with $.47, the amount required to sink premium, leaving the value of the bond $101.93 — $.47=$ioi.46. Next the half yearly interest at 3% per annum on $101.46 is $1.52, which taken from the coupon $2 gives $.48 for the sinking fund. Debit cash $2 for coupon received and credit in- come $1.52 for interest, and the bond account $.48 for the sinking fund. Proceed in this way to the end of the 2 years, and the re- sult will be exactly $100. Now debit cash $100 for the redemp- tion of the bond and credit the bond account with the same. It will be noticed that the premium has been returned into the cash ready for reinvestment, as also the interest ready for distribution to the beneficiaries. 4. Dividends. The general rule is that dividends belong to him who holds the stock when the dividend is declared and allotted, irrespective of when the earnings accrued or when the dividend is payable. Consequently a dividend earned be- fore a testator's death, but declared and paid after, goes to income. This rule applies as between a life beneficiary and a remainderman, but interest accruing de die in diem is ap- portionable, e. g., in the case of interest on a mortagage. The courts have held that the same rule applies, whether the divi- dend is paid in cash, scrip or stock. If there is a mere pro rata distribution of treasury stock to the stockholders, not representing profits, it belongs to the corpus and not to the income. Its issue decreases to that ex- tent the value of the original shares, giving to the stockholders a larger number of shares, but no larger fund, and the total issue represents capital only. AND Testamentary Trustees. 51 Privileges or option given to stockholders to subscribe for stock and bonds, which option has a value of its own, is held by the trustees as capital, not income. If a corporation is consolidated with another, and for the purpose of equalizing the interest of shareholders of the stock in question, there is during the life tenancy an extra issue to them of stock or of bonds of the consolidated company, this surplus issue merely follows the interest which it is issued to equalize. In allotting stock dividends to life tenants, only such portion should be distributed as represents earnings ; e. g., if stock has been bought at a premium, and an extraordinary dividend has been declared, it must be ascertained whether the selling price of the stock remains as high as that at which it was bought, and if it has fallen the difference must be taken from the extra- ordinary dividend, and accounted as corpus, and the balance of the dividend will be income. Contracts of trust. Contracts entered into by decedent prior to his death must be carried out by trustees, and any profits re- sulting therefrom will belong to the corpus and not to income. Receiving payment on account. It is held in the matter of Tietgen (5 Dem. 350) that payments paid on account of a debt, though not exceeding the accrued interest, must be considered as capital, not income. Should the entire debt be paid, with in- terest, the interest would constitute income. LECTURE X. general remarks on offsets to income and to corpus; ALSO ON apportionment AND ADJUSTMENTS OF EX- PENDITURES BETWEEN CORPUS AND INCOME. 1. The intent of the trust instrument must be followed in making deductions from (i. e., charges against) income. 2. The creator of the trust may order corpus as well as in- come to be paid to the beneficiary. 3. He may direct income to be paid subject to charges which ordinarily belong to corpus. 4. The income may be granted subject to an annuity of a certain amount. 52 Accounts of Executors 5. He may order the gross income to be paid to the benefi- ciary. But where not in opposition to the trust, the following are the principal rules in relation to the above offsets, apportion^ ment and adjustments: 1. Taxes and assessments which have become a debt of the testator prior to his decease are payable by the executor out of corpus. 2. Expenses incurred in the borrowing of money to invest in government bonds, so as to avoid the tax otherwise payable out of income, are chargeable against income. 3. Trustees' commissions on rent and income come out of income. 4. Trustees' commissions for receiving and paying out cor- pus come out of corpus. 5. Fees for legal expenses in litigation resulting in a trus- tee's appointment in place of a predecessor removed come out of corpus. 6. Ordinary repairs must be charged against income, other- wise the corpus will be depleted for the benefit of income. 7. Interest on incumbrances, e. g., on mortgages, must be borne by the beneficiary, i. e., taken out of income. 8. The sundry expenses in conducting a business, such as wages, rent, loss from bad debts, and depreciation of plant, come out of income. In apportionment and adjustment the following cases re- quire to he considered: 1. Expenditures required to be made on property received by trustee in an unfructiferous condition, in order to preserve it from decay, constitute a mere shifting of the fund. 2. Where the trustee under the trust is authorized to invest and reinvest in real estate, he may make improvements on the theory that such expenditure constitutes an investment. This also is a mere shifting of the fund. 3. Where the expenditure is essential to preserve the estates from destruction, and results in a benefit both to the beneficiary and the remainderman. 4. Where the expenditure is required to make the estates AND Testamentary Trustees. 53 produce revenue, or a substantial revenue, and also to en- hance the value of property, there is a mere shifting of the fund. 5. Where there are wasting values, it is necessary to charge the income with a sinking fund in order to preserve the corpus. 6. Compulsory outlays, such as municipal assessments for flagging sidewalks, widening streets, repairs or reconstruction ordered by building department, must be so charged as to affect equitably the beneficiary and the remainderman, and this may or may not be by apportionment of the outlay, according to the requirements of the case. EXAMPLES. 1. Peck vs. Sherwood, 56 N. Y., 615. Here the life interest in land is vested in one person, and the remainder vested in another, and there is no fund in which the two have an interest in common, but there is an available fund in the hands of the trustee in which the life tenant has no interest. The trustee of the remainderman was authorized by the court to unite with the life tenant in an outlay to protect the property in which the remainderman and the life tenant have interests in common. The capital was charged one portion exclusively out of the available fund, in which the life tenant had no interest; leav- ing the other portion exclusively as a liability against the life tenant. The interest of the life tenant in the real estate is found by Northampton tables, and this taken from the total value of the real estate affected gives the interest of the re- mainderman. The apportionment of the outlay must be in proportion to these respective interests, hence as the total value of the real estate is to life tenant's interest, so is the total outlay to life tenant's share of outlay. 2. Stevens vs. Melcher, 80 Hun. 514 (522-525) is a more common case. Here the trustee held in trust both real and personal property, in which the remainderman and the life tenant had interests in common. For an outlay on the real estate, the adjustment of interests was made by charging the whole of the outlay against capital, i. e., the whole was taken out of capital (corpus), thus bringing about an automatic ad- 54 Accounts of Executors justment by the remainderman losing the amount of the out- lay and the life tenant the income from the portion lost. The same applies in Whittemore vs. Beekman, 2 Dem. 275 (283), where a loss is sustained in an authorized investment; also in another branch of the Stevens vs. Melcher case (80 Hun., 525 seq.), where the outlay has effected a cor- responding increase in the value of the improved real estate; a charge of the outlay to the extent of the entire permanent increase may be taken out of capital, as by this means there is a mere shifting of investment from personalty to realty, while any balance over and above permanent increase may be charged directly to income. 3. In Cogswell vs. Cogswell, 2 Edw. Ch. 231 (240-242), certain buildings in Cedar Street are left in trust with re- mainder. The city in widening the street cut off ten feet in front. The court directed that the cost of erecting warehouses on the lots be paid from the available capital ; that out of the rents 6% of the cost of the buildings be reserved, together with a reasonable allowance for depreciation of the buildings until the life estates fall. In this case the life tenants receive the net receipts and profits of this portion of the estate, and in the meantime the money expended is a good and safe investment, drawing 6% during the life estate. In the case of only one life tenant the expectation-of-life table will give the average of life for the life tenarit. Then the difference between the estimated value of the buildings at the end of the average life and the present value will give the total depreciation, which, divided by the average life, will give the depreciation to be written off yearly from the income as a sink- ing fund to the cost. 4. In Swain vs. Ferine, 5 Johns Ch. 482 (491 seq.), a wddow filed a bill for assignment of dower and mesne profits ; the heirs had been obliged to pay off a mortgage to which the dower interest was subject. The decree gave the widow one-third and mesne profits, less her ratable contribution toward the redemption of the mortgage. The court held that in view of her getting her third from the mortgage she ought to pay interest on one-third of the mortgage debt paid by the heirs, but as this method would be inconvenient and embarrass- ing, the direction was that the value of such annual payment AND Testamentary Trustees. 55 for her life should be computed and subtracted from the mesne profits*, any excess to be subtracted from the dower assigned. 5. Stillwell vs. Doughty, 2 Bradf. 311. Where there was no trust a sewer assessment was wholly charged on the re- mainderman, and the life tenant was directed to pay interest on the assessment. When property does not immediately pass into the hands of the trustee at the beginning of the trust, such a sum of money, called the present worth, must be found as at the current rate of interest for the time between the beginning of the trust and the time it passes into the trustee's hands will amount to the value passing into his hands. This present worth is cor- pus, and the difference between it and the amount passing into his hands is income. • EXAMPLES. 1. The amount of legacy not immediately received. 2. Where the property, being an unsuitable investment, is sold for conversion some time after the beginning of the trust. 3. Where the property is converted because of its unpro- ductiveness ; such as vacant lots. 4. Where principal and interest payable during trust are contained in one sum. 5. On an obligation in which the whole cannot be collected in the realization. 6. Gain or loss in temporarily conducting a business until it is converted. Wasting property, which may be of several kinds: I. Where the waste is indeterminate, until it is suddenly discovered as in the case of a mining property, or in a mining stock. The best way to treat this is to give the life tenant a cur- rent rate of interest on the inventory value, out of the gross income received, and to carry the balance to reduce the inven- tory. The current rate is to be continued on the diminishing value so long as there remains any balance. If after the capi- * The mesne profits are the profits of land while in the possession of a person not the owner. 56 Accounts of Executors tal has been wiped out income should be received, it will form corpus going to the remainderman. Of course, this new corpus should be reinvested so as to yield further income. Where the gross income is certain and the waste is de- terminate, but to the extent of only a part of the property: This is the case with a bond purchased by a trustee above par, the waste part being the premium. The rate per cent, the bond is actually yielding is to be determined from bond tables, and from the value of the bond and rate per cent, it yields can be found the interest, which taken from the coupons received gives what is usually called the sinking fund. The income ac- count is debited with the sinking fund and the bond account credited. The bond account is thus reduced in value by the operation, and the process is continued, using each time the diminishing balance, instead of the inventory value, until the premium is wiped out. The same method is appHcable to an annuity receivable by estate, except that the process is con- tinued until the annuity is extinguished. 3. In the case of a lease to the decedent during his lifetime, in which there is a yearly gain over rent to owner, repairs, in- surance, etc., which has a term of years yet unexpired, the following is the modus operandi for keeping the accounts : We presume that there is an account among the assets, repre- senting the inventory value of the lease, which we will call lease account. On receiving and disbursing for account of this lease open another account called realization of lease account. Debit cash yearly with all income and credit the realization account with the same. Also debit realization account yearly with all disbursements and credit cash with the same. Two cases may present themselves : (a) The credits may exceed the debits, and the difference will give the net realization, which is made up of both corpus and income received for the year, and which require to be separated. (b) The debits may exceed the credits, and the difference contains neither corpus nor income, but simply a diminution of corpus for the year. If the second case obtains, debit personal estate account with diminution of corpus and credit realization account with the same. AND Testamentary Trustees. 57 To separate the corpus from the income requires: 1. Choosing a rate per cent, of interest which should be such as can be obtained in investments of a safe kind. 2. A table of present values at the given rate per cent, of $1, payment of which is deferred, for one, two, three years, etc. If there be a net realization at the end of the first year, then multiply the net realization at end of first year by the present value of $1, payment of which is deferred one year at the said rate per cent. If there be a net realization at the end of, say, the third year, then multiply net realization by the present value of $1, payment of which is deferred three years, etc., etc., to obtain the corpus which is then realized. Having obtained it, debit the realization account with it, and credit the lease account with the same. At the end of any period debit realization account with net income and credit income account with same. Finally balance the lease account into the personal estate account for increase or decrease of realization over inventory value, when there is an income. From observing the entries carried into the personal estate account it will be seen how much the inventory value of lease was overvalued or undervalued. Apportionment of rents, annuities and dividends. These relate to sums of money regularly payable or becoming due. If an estate merely devolves on another as from a decedent to an heir, or to a life beneficiary, or from an executor to a trustee, the estate is not determined, and there is no appor- tionment; but if an estate is determined by the death of a recipient of the rents, annuities and dividends, then there is an apportionment reckoned from the last payment to the evening of the death of the last recipient. It, however, is only recover- able when the entire amount of which such apportionment forms part becomes due and payable and not before, from the person entitled to collect the whole. 58 Accounts of Executors Edward Brown's Estate I Debtors to Estate:— I Henry Edmonson 2 William Smith 3 Henry Smithson 4 John May 1 Henry Smith I^egacy left to decedent, but not paid him 2 Creditors of Estate:— I William Hopetown 2 Henry Thompson Henry Arnold 3 4 Judgment Creditors 3 Sundry expenses: — I Funeral expenses 2 Probate expenses 3 Transfer tax on IvCgacy left decedent 4 Accountant's and Attorney's fees 5 Commission, i. e., Legacy left in lieu of commission 4 Sundry persons interested in Estate: — I Elizabeth Brown, widow of decedent, life beneficiary of proceeds of mortgage 2 John Brown, son of decedent, residuary legatee 3 John Brown, next of kin of Elizabeth Brown CLASSIFICATION OF ACCOUNTS I Personal Estate account 2 Asset accounts 3 Distributive accounts Accounts and Transactions of Henry Arlington, Executor 1900 Dec. I I Dec. 31 31 fS. I 2 2 June 30 July I Edward Brown died this day, having nominated H. Arlington Executoi Inventory taken and appraised Mortgages receivable Furniture Cash in house Debts due deceased, Henry Edmonson Wm. Smith Henry Smithson John May Accrued interest on mortgage for 5 months to date Found that decedent owes State Transfer tax on legacy left him, being at 5 per cent, on $1,000 Collected 6 months' interest ($8,000 at 5 per cent.) to date Newly discovered assets:— Henry Smith's indebtedness to decedent Legacy left by Millard Werner, deceased Received above legacy Approved the following claims against Estate:— Funeral expenses Probate expenses William Hopetown, amount of his bill Henry Thomson, amount of his bill Henry Arnold, amount of his bill Paid the following : — Tax on legacy Funeral expenses Probate expenses William Hopetown Henry Thomson Henry Arnold Life beneficiary Received 6 months' interest on mortrage to date Received amount of mortgage paid on this day Henry Edmonson paid his indebtedness to Estate William Smith paid his indebtedness to Estate Henry Smithson paid on account Furniture sold by auction this day Depreciation on sale of furniture Deposited in Knickerbocker Trust Co. 8,000 1,000 800 1,000 500 500 250 . 166 200 1,000 1,000 150 100 50 40 10 50 150 100 50 40 10 140 200 8,000 1,000 500 200 800 200 10,000 67 12,216 67 AND Testamentary Trustees. 59 ist December, 1900 Sundries to Personal Bstale account Mortgages receivable Furniture Cash in house Debts due decedent : — Henry Edmonson William Smith Henry Smithson John May Interest accrued on mortgage for 5 months to date As per inventory taken this day -31st December, 1900- Personal Estate account To L,egacy account For amount of transfer tax on legacy to deceased 1st Februarj', 1901- Sundries to Personal Estate account For newly discovered assets Henry Smith, indebtedness to Estate I,egacy from Estate of Millard Werner -2nd February, 1901- Personal Estate to Sundries Funeral expenses Probate expenses Wm. Hopetov/n, amount of his bill Henry Thomson, amount of his bill Heary Arnold, amount of his bill ■ 30th June, 1901- Personal Estate account To Furniture account For depreciation on sale of furniture 8,000 1,000 800 1,000 500 500 250 166 200 1,000 350 67 12,216 50 1,200 67 In Accordance with Decree of Surrogate, it Will Be Necessary to Make the Following Entries : Personal Estate account to Cash To pay judgment creditors Personal Estate account to Cash For commission 500 For Accountant's and Attorney's fee 500 lyife beneficiary account to Cash For amount paid John Brown as next of kin Personal Estate account to Sundries Cash Knickerbocker Trust Co. H. Smithson's account (Assignment) Jno. May's account (Assignment) For assets turned over to John Brown as residuary legatee The above entries have been posted to their respective accounts as of ist July, 1901, in order to close accounts of the I,edger 700 1,000 60 11,150 700 1,000 60 400 10,000 500 250 6o Accounts of Executors Dr. Cash Book and Cash Account of Estate of Edward Brown. 1900 Dec. 1901 June July Cash in house as per inventory Interest accrued account — Interest to ist inst. 166.67 Ivife beneficiary account— Interest from ist inst. to date 33.33 I,egacy account — Received legacy left E. Brown by the late Millard Werner Ivife beneficiary account — Interest to 31st May, 1901, when life beneficiary died 166.67 Personal Estate account — Interest from 31st May, to date 33.33 Mortgage receivable account — Mortgage paid oflF this day H. Edmonson paid his indebtedness H. Smith paid his indebtedness Henry Smith paid his indebtedness Furniture account — Sold by auction this day Balance 800 8,000 1,000 500 200 800 12,700 2,160 I 2,160 Cash Book and Cash Account of Estate of Edward Brown. Cr. 1901 Feb. July July Legacy account — Paid tax on legacy Funeral expenses account— Undertaker's bill Probate expenses— paid this day William Hopetown — paid this day Henry Thomson— paid this day Henry Arnold— paid this day lyife beneficiary— paid her on account Knickerbocker Trust Co.— deposited this date at 2 per cent. Balance John Brown, as widow's next of kin Commission Accountant's and Attorney's fees John Brown, residuary legatee Judgment creditors 10,000 2,160 60 500 500 400 700 12,700 2,160 AND Testamentary Trustees. 6i Dr. LEDGER OF ESTATE OF EDWARD BROWN (i) Personal Estate Account Cr. 1900 Dec I?eb. Jiuie July July Transfer tax on legacy Funeral expenses Probate expenses William Hopetown H. Thomson H. Arnold Depreciation of furniture Balance Distributed by decree : Judgment creditors Administration expen- ses John Brown, residu- ry legatee 50 L^. 31 150 100 50 40 10 200 600 12,850 '& I June 30 13,450 - July I 700 1,000 11,150 — 12,850 Mortgages receivable Furniture Cash in house Debts due deceased Henry Bdmonson William Smith Henry Smithson John May Accrued interest on mortgage Henry Smith for debt not included in in- ventory. lyCgacy left by Mr. Werner. Interest from 31st of May to date Balance 8,000 1,000 800 I.OOO 500 500 250 166 12,216 200 1,000 33 13,450 12,850 12,850 33 (2) Mortgages Receivable 1900 Dec. Personal est. account 8,000 1901 June 30 Cash 8,000 (3) Furniture Account, of which the Widow has the Use During Her Life. 1900 Dec. Personal est. account 1901 June Proceeds of sale Personal est. account for loss on sale 800 200 62 Accounts of Executors Dr. LEDGER OF ESTATE OF EDWARD BROWN (4) Debts Due Estate of Edward Brown Cr. 1900 Dec. Feb. I I I H. Edmonson Wm. Smith Henry Smithson John May Henry Smith H. Smithson Jno. May t,ooo 500 500 250 200 1901 June 30 July 1 June 30 July I I H. Edmonson Wm. Smith Carried down Henry Smith Personal estate Personal estate 1,000 500 500 250 200 2,450 2,450 July 500 250 750 : 500 250 750 (5) Interest Accrued to ist December, 1900 1900 Dec. I Personal est. account 166 67 1900 Dec. 31 Cash 166 67 (6) Knickerbocker Trust Co. 1901 July I Cash deposited at 2 per cent, per annum 10,000 1 1 1901 July 1 John Brown, R. L. 10,000 (7) T.ETwACY Receivable Account 1901 Feb. I 2 Personal est. account Paid transfer T. 1,000 - 1901 Feb. 31 I Personal est. account » Cash 50 1,000 1,050 2,050 DISTRIBUTION ACCOU (8) Life Beneficiary Account (the wid NTS ow died 31st May, 1900) 1901 Feb. July I I Cash on account Balance Jno. Brown, next of kin ■s - 1901 June July 31 30 1 Interest Interest from 31st Dec. 1900, to 31st May, 1901 Balance 33 166 33 67 200 200 July 60 60 — AND Testamentary Trustees. 63 LEDGER OF ESTATE OF EDWARD BROWN Dr. (9) Funeral Expenses Cr, 1901 Feb. Cash 150 1901 Feb. 2 Personal est. account (10 ) Probate Expenses I90I Feb. i 2 Cash 100 Tel 2 Personal est. account 100 (11) Debts Due by Estate (Creditors). 1901 Feb. Paid Wm. Hopetown " Henry Thomson " H. Arnold 1901 Feb. Wm. Hopetown H. Thomson H. Arnold (12) Trial Balance ist July, 1901, before S. Decree Cash from C. B. Henry Smithson John May Knickerbocker T. Co. 2,160 500 250 10,000 12, 910 Personal est. account Kst. Life Beneficiary 12,850 60 12,910 64 Accounts of Executors Contents of Schedules, Surrogate Court of County of New York Amount of Inventory -Schedule A- Sales:— Furniture Debts mentioned in Inventory, which have been col- lected:— Henry Edmonson $i,ooo William Smith 5cx5 Interest collected: — Total 400 lycss included in Inventory 166.67 -Schedule B- Debts not collected or collectible: — Henry Smithson 500 John May 250 I/Osses by accident Assets discovered after taking of Inventory:— Debt due Estate by Henry Smith 200 lyCgacy left deceased 1,000 -Schedule C- Expenses: — Untertaker's bill Probate expenses Transfer Tax on legacy 150 100 50 -Schedule D- Judgment Creditors: — Allowed Disputed Moneys paid to Creditors: William Hopetown Henry Thomson Henry Arnold 248 452 -Schedule E- AU moneys paid to widow All moneys paid to next kin 140 000,00 -Schedule F- Elizabeth Brown, widow of deceased, 18 St. James Place, Brooklyn John Brown, son of deceased, 18 St. James Place, Brook- lyn Schedule G H. Arlington, Executor, legacy in lieu of commission Balance due widow Interest on mortgage from death of decedent to death of widow, viz., fromi st Dec. 1900 to 31st May 200 icK)3 Paid her on account LOSSES ON SALES Appraised value of furniture Net return of sale 140 1,000 800 800 1,500 750 000 300 •100 140 60 33 67 AND Testamentary Trustees. 65 Accounting Before Surrogate I/Henry Arlington, Executor,chargemyself as follows:— With amount of inventory With increase as shown in Schedules A and B Interest received Newly discovered assets I credit myself as follows:— With loss on sales as per Schedule G With debts not collected, Schedule B With expenses as per Schedule C With moneys paid to creditors, Schedule D With all moneys paid to widow and next of kin, Schedule E Debts not collected. Schedule B Total amount to be distributed Decree of Surrogate Amounts coming to residuary legatee, John Brown: Debts not collected Cash Knickerbocker Trust Co., deposit Amounts to be paid by Executor:— Due John Brown as widow's next of kin Commission allowed Accountant's and Attorney's fees Judgment creditors 233 1,200 200 750 300 100 140 750 400 10,000 33 13,650 12,160 750 12,910 ",150 1,760 12,910 66 Accounts of Executors Executor and Trustee Combined, with Account Carried to a Certain Point -Estate of John Hoskine Under a Trust Deed, John Hoskins deeded to William Smith in trust his propertj'^ both Real and Personal, to carry out the provisions of the Trust Under the Trust Deed, the following are the principal provisions of the Trust: — 1 He leaves to his wife, as life beneficiary, the gross income from his personal prop- erty, and the use of his household furniture 2 He leaves to his only son, John Hoskins, all his Real Estate 3 He leaves to his only daughter, Mary, a legacy of $5,000, to be paid to her as soon as convenient after his death 4 He leaves a life insurance policy to Wm. Smith as Trustee, to be collected and to form part of the fund of his personal property 5 The Estate is to be carried on to the death of his wife, and the Real Estate to be transferred to the son, at the discretion of the Trustee, who is required to turn over the rents to the son as they are collected John Hoskins died 31st March, 1899 AND Testamentary Trustees. 67 Journal 4th April, 1899 Sundries to Personal Estate account Cash in Bank Household furniture Bank shares Life insurance policy On deposit with Trust Co., principal and interest Rent due but not paid As per Inventory made by appraisers this day loth April, 1899 Personal Estate account. Sundries For outstanding debts due by deceased, which are al- lowed, as there are sufficient funds to meet all demands Servants' wages A. Langstadter's bill Wm. Anderson, loan from him John Harris' bill Daniel Tompson's bill William Fife's bill Brooks Bros.' bill Acker, Merrill & Condit's bill -loth April, 1899- Personal Estate account to Sundries Funeral expenses — Undertaker's bill Dr. Sampson's bill for medical attendance -19th April, 1899- Personal Estate account To Transfer tax Paid on net assets to N. Y. State 13th May, 1899 Bank Shares account To life beneficiary account For her portion of dividend (interest), from 31st March, 1899, to date -13th May, 1899 - Bank Shares account To Personal Estate account For profit on sale of Bank shares 14th May, 1899 Trust Co.'s account To life beneficiary account For interest from 31st March, 1899, to date loth June, 1899 Personal Estate account To Legacy account For legacy left Mary Hoskins loth June, 1900 Personal Estate account To expenses on realization and administration For total expenses chargeable against capital Commission 250 Legal expenses 375-87 Miscellaneous . 50 250 2,000 65,769 45,250 15,000 2,019 1.250 29 3,557 47 150 85 105 152 ^ 50 150 52 2,463 83 2,463 235 62 235 289 38 289 6 12 6 5,000 5,000 675 87 675 87 68 Accounts of Executors Dr. Cash Book and Cash Account of Estate of John Hoskins April May 4 18 13 14 15 Nov. 15 1900 May 15 June 10 Cash in Bank Life insurance account — Collection of policy Bank shares account— Sold 400 shares at $115, less expenses of sales $225 Trust Co. account — Withdrawn deposit $2,000 with interest to date Rents due but unpaid at decedent's death: — Andrew Mason 375 Wm. J. Renall 500 Maiy Hoskins 375 Rent account — Rent from John Hardy due since testator's death Life beneficiary account — 6 months' interest to date on mortgage on No. 40 W. 28th St. Life beneficiary account — 6 months' interest to date on mortgage on No. 40 W. 28th St. 250 15,000 ! 45,775 2,025 1,250 250 1,030 1,030 Balance 66,610 Cash Book and Cash Account of Estate of John Hoskins. Cr. Funeral expenses Sundry Creditors account — Paid Dr. Sampson's bill Servants' wages A. Langstadter's bill Wm. Anderson's loan John Harris' bill Daniel Tompson's bill Wm. Fife's bill Brooks Bros.' bill Acker, Merrill & Condit's bill Transfer tax paid this day Rent account — Paid John Hoskins rent received from John Hardy Mortgage receivable account — Loan made this day secured by mortgage on No. 40 W. 28th St., N. Y. Legacy account— Paid Mary Hoskins her legacy Life beneficiary account— Paid life beneficiary on account this day Life beneficiary account— Paid life beneficiary on account this day Expenses of realization and administration: — Commission to Executor 250 Legal expenses 375-87 Miscellaneous expenses 50 Balance 1,210 74 66,610 41 1899 April 10 May 19 15 June Nov. 10 12 1900 May 12 June 10 1 150 1 52 50 150 75 12 2,656 25 272 62 . 60 62 85 62 105 12 152 12 2,463 «3 1 250 51,500 5,000 750 1,000 675 87 1,210 74 66,610 Dr. AND Testamentary Trustees. 69 LEDGER OF ESTATE OF JOHN HOSKINS (i) Personal Estate Account Cr. 1899 1899 Apr. 10 Servants' wages 150 Apr. 4 Cash in bank 250 A. I^angstadter's bill 75 12 Household furniture 2,000 W. Anderson, loan Bank shares 45,250 from him 2,656 2.'> Life insurancy policy 15,000 John Harris' bill 272 62 Trust Co., principal D. Tompson's bill 60 62 and interest 2,019 29 W. Fife's bill 85 62 Rents due but not paid 1,250 Brooks Brothers' bill 105 T2 Acker, Merrill & Condit 152 12 Dr. Sampson's bill 52 SO Undertaker's bill 150 Balance 62,009 32 29 65,769 65,769 29 iq Transfer Tax 2,463 8^ Apr. 10 Balance 62,009 ^2 June 10 I^egacy 5,000 May i'^ Profit on sale of bank 1900 shares 289 ^8 June 10 Commission Legal expenses Miscellaneous exp. 250 375 50 87 Balance 54,159 June 10 Balance 62,298 70 62,298 70 54,159 (2) Household Furniture Account 1899 Apr. Personal est. account < 2,000 (3) Life Insurance Account 1899 Apr. 4 Personal est. account 15,000 i 1899 Apr. 18 Cash j j 15,000 1 1 1 (4) Bank Shares Account 1899 Apr. 4 .May 13 13 Personal est. account I 45,250 Dividend from 31st Mch. 1899 to date Personal est. for profit on sale 1 45,250 May 13 235 62 289 38 45,775 Proceeds of sale 45,775 45,775 (S) Trust Company A.CC0UNT 1899 Apr. May 4 14 Personal est. account Life beneficiary for in- terest to date 2,019 6 29 12 41 May 14 Cash 2,025 41 2,025 2,025 41 70 Accounts of Executors Dr. LEDGER OF ESTATE OF JOHN HOSKINS (6) Mortgage Receivable Account Cr. 1899 May lyoan made this day secured by mort- gage on 40 W. 28th St., New York 5^500 (7) Rents Due But Not Paid at Decedent's Death 1899 Apr. Personal est. account 1,250 1899 May Andrew Mason Wm. J. Renall Mary Hoskins 375 500 375 1,250 (8) Funeral Expenses. 1899 Apr. 19 Cash 150 J 1899 1 1 Apr. 10 personal est. account 150 (9) Creditors of Estate 1899 Apr. Paid servants' wages Paid A. Langstadter Paid W. Anderson Paid J. Harris Paid D. Tompson Paid W. Fife Paid Brooks Bros. Acker, Merrill &Condit Dr. Sampson's 1899 150 Apr. 10 72 12 2,656 25 272 62 60 62 85 62 105 12 152 12 52 50 3,609 97 1 ! Servants' wages A. L,angstadter's bill Wm. Anderson J. Harris' bill D. Tompson's bill W. Fife's bill Brooks Brothers' bill Acker, Merrill StCondit Dr. Sampson' s*bill 150 75 2,656 272 60 85 105 152 52 3,609 (10) Rent Account 1899 May Paid J. Hoskins, son of decedent, rent re- ceived 250 May Rec'd from Jno. Hardy rent due since tes- tator's death (11) Legacy Account 1899 June Cash 1899 June 10 Personal est. account 5,000 AND Testamentary Trustees. 71 LEDGER OF ESTATE OF JOHN HOSKINS Dr. (12) Life Beneficiary Account (Died 14th May, 1900) Cr. 1899 Nov. 1900 May June 12 12 10 Pd I,. B. on account Pd L. B, on account Balance 750 1,000 551 74 74 i!99 May Nov. 1900 May June 13 14 15 15 10 Interest on B. S. to date Interest from Trust Co. 6 mos. interest to date 6 mos. interest to date Balance ^^6 1,030 1,030 2,301 62 12 2,301 74 551 1'^ (13) Transfer Tax 1899 Apr, 19 Cash 2,463 83 1899 Apr. T9 Personal est. account 2.463 83 _ (14) Expenses of Realization and Administration 1900 June Commission Legal expenses Miscellaneous 250 375 50 675 1900 June Cash 87 67^ 87 (15) Trial Balance 20th June, 1900 Cash Household furniture Mortgages receivable 1,210 2,000 51.500 54,710 74 Life beneficiary estate Personal est. account 551 54,159 54,710 72 Accounts of Executors Account of Charge and Discharge of Management Death of Testator, 31st March, 1899 1899 Apr. Apr. May 1899 May Nov. 190C May I 4 I 18 13 14 15 15 15 15 Charge FOR ACCOUNT OF CAPITAL Estate as given in inventory:— Cash in Bank Household furniture Bank shares Ivif e insurance policy On deposit with Trust Co. Deposit Interest to date Rents due and unpaid Funds and Estate realized: — Inventory Cash in Bank 250 Amount of life insurance policy 15,000 Proceeds of sale of Bank shares 45,250 Deposit in Trust Company 2,019.29 Rents due and unpaid 1,250 2,000 19 1 1 1 I i 29 ed 41 41 29 12 74 250 2,000 45,250 15,000 2,019 1,250 29 Realiz- 250 15,000 45,775 2,025 1,250 65,769 289 66,058 00,000 66,058 2,301 68,360 29 63,769.29 64,300 63,769 Gross gain including income Ivcss portion belonging to income:— Portion of dividend on Bank shares held from 31st March, 1899, to 13th May, 1899 235.62 Interest on deposit in Trust Co. from 31st March, 1899, to 14th May, 1900 6.12 Total Capital realized Rents received: — From Andrew Mason Wm. J. Renall Mary Hoskins John Hardy I^ess rents belong to capital paid as above Paid John Hoskins, .sole heir For account income:— 6 months' interest on mortgage on No. 40 W. 28th St., to date 6 months' interest on mortgage on No. 40 W. 28th St., to date Add: Portion of dividend of bank shares contained in selling price from 31st March, 1899, to 15th May, 1899 235.62 Interest on deposit in Trust Co. from 31st March, 1899, to 14th May, 1899 6.12 531 241 38 375 500 375 250 67 1,500 1,250 74 *25o 250 00 1,030 1,030 67 2,060 241 74 Total of charge REAL ESTATE By terms of Trust Deed this property has been conveyed by Trustee to John Hoskins, son of decedent, and is valued at 45,000 41 AND Testamentary Trustees. 75 OF THE Executor and Trustee of Estate of John Hoskins Death of L. B., 14th May, 1900. 1899 Apr. June 1900 June 1899 May 1900 May 19 III 1899 May -Discharge- payments OUT OF CAPITAL 1. Funeral expenses 2. Debts due by deceased: — Dr. Sampson's bill Servants' wages A. I^angstadter's bill William Anderson's bill Daniel Tompson's bill John Harris' bill William Fife's bill Brooks Bros' bill Acker, Merrill & Condit's bill 3. Transfer tax 4. I,egacy paid 5. Expenses of realization and administration: Commission to executor Legal expenses Miscellaneous expenses Total, payments out of capital PAYMENTS OUT OF INCOME I. Payments to life beneficiary: — Paid life beneficiary on account Paid life beneficiary on account 2. Expenses of management and other charges Estate as of loth June, 1900; — Mortgage on No. 40 West 28th St., N. Y. Household furniture Cash in Bank INVESTMENTS MADE Made loan this dav, secured by mortgage on No. 40 W. 28th St., N, Y., af 4 per cent, per annum 5i>5oo 52 150 75 2,656 60 272 85 105 152 750 1,000 51,500 2,000 1,210 87 150 3.609 2,463 5,000 675 11,899 1,750 13,649 00,000 54,710 68,360 67 74 74 Accounts of Executors Another Form by Means of Schedules 1899 May Nov. 1900 May 1899 May 1900 May June 1900 June I. Income Received For life beneficiary's portion of dividend on Bank shares from 31st March, 1899, to date 6 months' interest to date on mortgage on No. 40 W. 28th St., N. Y. Interest on deposit in Trust Co. from 31st March, 1899, to date 6 months' interest to date on mortgage on No. 40 W. 28th St., N. Y. II. Income Paid None Summary of income: — Income received Income paid Amount paid life beneficiary: — Cash paid life beneficiary on account Cash paid life beneficiary on account Amount due life beneficiary III. Changes in Investments Inventory:— Cash lyife insurance policy Bank shares Deposit in Trust Company Rent due and unpaid Household furniture Assets realized: — Cash on hand Sale of Bank shares:— Sale 45,775 L,ess accrued dividend 235.62 Household furniture Amount of life insurance policy Withdrawn from Trust Co. Withdrawn 2,025.41 lycss interest 6.12 Received rent due and unpaid Less inventory value as above Increase of assets IV. Additions to Principal 235 1,030 6 1,030 0,000 2,301 0,000 750 1,000 551 250 15,000 45,250 2,019 1,250 2,000 250 45,539 2,000 15,000 2,019 1,250 62 29 38 29 2,301 2,301 65,769 66,058 65,769 74 74 74 29 AND Testamentary Trustees. 75 1900 June V. Deduction from Principal Charges against reminderman: — Dr Sampson's bill 52.50 Servants' wages 150 A. Langstadter's bill 75-12 William Anderson's loan to de- cedent 2,656.25 John Harris' bill 272.62 Daniel Tompson's bill 60.62 Wm Fife's bill 85.62 Brooks Bros.' bill 105.12 Acker, Merrill & Condit's bill 152.12 3,609 Funeral expenses, Undertaker's bill 150 Transfer tax 2,463 Legacy to Mary Hoskins 5,000 Expenses in realization and administration: — Commission 250 Legal expenses 375-87 Miscellaneous expenses 50 VI. Principal on Hand Cash: — Cash on hand 1,210.74 Less due life beneficiary 551-74 Household furniture Mortgage on No. 40 W. 28th St., N. Y. Summary of principal: — Inventory Increase from transfers Addition to principal Less deductions from principal Net total principal 11,223 675 659 2,000 51,500 65,769 289 000 97 83 67 11,899 54,159 66,058 67 11,899] 67 54,195 i >>».,.. »», r 14 DAY USE RFTUKN TO DESK FROM WHICH BORROWED LOAN DEPT. This book is due on the last date stamped below, or on the date to which renewed. Renewed books are subject to immediate recall. 1 w%nft c© iJAW*>7 C i1 'ifc . tf S' ljti i j KECP LP jApre^^^ LD 21A-50to-4,'60 (A9562sl0)476B General Library UtUTcmty of California Berkeley ^Hilli lllilillllltfillilll Hi^^^^Bi w^^^H^ <9^^^^^^B' ^^w t 3 I ; £. ;l niiiliiil ;p PI jp ■1 1^ 1 iiiiii iiliilliw.. 'll ilH iiiii HlBiiiiiiii lilUillliii ■BH^ laui i^lliHlHUii;