By keeping the Realization account during the progress of administration we have avoided at the time of winding up the estate the tedious work of digging out the information needed for the schedules, and have so arranged our work that the most important of our schedules is prepared for us in the very keeping of our books. In fact, it may be said that the first five of our schedules are prepared for us by our method of keeping our accounts, for under the plans suggested by earlier writers separate schedules are required for each of the five items combined in our Schedule A. § 635. Other Corpus Credits The other corpus items for which the executor takes credit in the account are shown in the schedules listed below (see Form 28): Schedule B, Funeral and Administration Expenses. Schedule C, Debts of Decedent. Schedule D, Payments on Legacies. Schedule E, Payments of Principal to Trustee. These schedules are easily prepared from the entries on the synoptic or general ledger, being, in fact, merely copies of the accounts with the necessary explanatory matter. The form in which they are written is largely a matter of personal pref erence. These accounts should then be closed on the books by the following entries: Estate Corpus Payment of Principal to Trustee : $7,239.05 $7,239.05 For the closing, four journal entries are preferred to a compound entry because the result of the separate entries is that the Estate Corpus account now contains the summary of the executor's account in so far as corpus is concerned. The credit balance in the Corpus account after these entries have been made is the value of the inventory and corpus cash on hand. 3 In closing the summary as to corpus the reader will notice that the total of the credits is carried over and deducted from the total of the debits. The difference is the amount of corpus cash. The balance remaining in the inventory per the books and Schedule A (sixth column) is then entered on the summary again and added to the amount of corpus cash, for the reason that since the executor has taken credit by Schedule A for the inventory unsold, he must now charge himself with it because it constitutes part of the estate assets remaining on hand, from the responsibility for which he has not been released. § 636. The Income Summary The debit against the executor on account of income is the amount of the credit to Income account. The items making up this amount are copied with the necessary explanations in Schedule G. The credits which the executor takes are listed in: Schedule H, Expense Against Income. Schedule I, Loss on Income. Schedule J, Payments of Income to Trustee. These schedules are virtually transcripts of those ac This figure cannot be obtained from the books at this time. counts, which on the books are then closed by the following The Income account on the books will then show the amount of cash belonging to income in the hands of the executor, which amount should also be the difference between the income with which the executor has charged himself on the summary and the charges against income with which he has credited himself. § 637. Reconciliations The closing entries have now been made on the books and the balances are brought down. It is well at this point to make certain that the necessary reconciliations, most of which have been spoken of above, exist: 1. The two amounts of cash shown on the summary, i.e., cash on hand belonging to corpus and cash on hand belonging to income, must equal the total of the balances in the various cash accounts on the books. 2. The amount of the Estate Corpus account on the books is the amount which the summary shows to be still charged to the executor on account of corpus. 3. The amount of the Income account on the books is the amount which the summary shows to be still charged to the executor on account of income. 4. The sum of the balances in the Estate Corpus and Income accounts on the books equals the sum of the balances in the Inventory and the various cash accounts, and equals the total amount with which the executor remains charged by the summary on account of both corpus and income. § 638. Decree of Distribution The executor is now ready to present his accounting to the court and have official approval of his stewardship given in the form of a decree of distribution. Of course in states. which prescribe by statute the arrangement or the form in which the schedules are to be prepared, the law will have to be followed, but the general principles set out above will apply. The sections which follow show the entries needed to record the transactions resulting from the decree of distribution. § 639. Expenses of Accounting An allowance to the executor for the expense of rendering his account is made by the court at the time of the accounting and consequently the amount cannot be included in the account itself as a disbursement already made by the executor. The law usually fixes certain amounts to be allowed and the court has some discretion in making further allowances. Before the closing of the books this would have been an administration expense, but since there are so few entries to be made at this stage, the nominal accounts are not reopened. This payment is accordingly debited directly to Estate Corpus, since it is a deduction from the corpus. The entry is: Estate Corpus ... $....... $..... § 640. Executor's Commission The law governing the allowance of commissions has been. discussed in § 196. At the time of rendering the decree of distribution the court awards the representative his commission. The commission thus allowed must be prorated between corpus and income in the ratios that the amounts on which the receiving and distributing commissions on account of principal and income are computed bear to the total of both, but in the computing of commissions, corpus and income must be considered together, because in states in which the commission is payable on a sliding scale, the first amounts being at higher rates, the computation of the commissions would otherwise be excessive. For the same reason that we did not reopen any corpus expense accounts we do not reopen the Expense, Income account, and the entry is made as a debit direct to Corpus and to Income: Estate Corpus Cash § 641. Interest on Legacies $....... $...... The interest on legacies which was allowed by the decree of distribution is a proper charge against income because the income has been increased by the executor's retention of cash which should have been paid to the legatees at the expiration of one year from the issuance of letters testamentary, the date upon which the executor may begin to pay legacies. The entry is, then: Income Cash § 642. Final Distribution as Executor $...... $...... After allowing the above items the decree of distribution awards the balance of the corpus and income to the trustee. The assets other than cash form a part of the residue of the estate and become principal of the trust because they were in existence at the time of death. The inactive bank accounts may include accretions of income from interest accrued after |