with disbursements. The facts which should be shown are sufficiently indicated by the schedules which follow: ESTATE OF JAMES C. DAWSON FIRST ANNUAL REPORT OF CHARLES FRAZIER, Trustee ESTATE OF JAMES C. DAWSON FIRST ANNUAL REPORT OF CHARLES FRAZIER, Trustee Collector of Taxes..State, county, city taxes $ 429.62 Life Tenant........ Income from this trust 1,000.00 Jan. 31, 1922 Salaries and office rent and expense. 1,000.00 140.76 Jan. 31, 1922 Transfer of excess income to Undivided Estate (Schedule No. 24). Jan. 31, 1922 Balance (Schedule No. 1). Total 230.00 None $6,230.00 The opening balance of income cash should be shown as the first item on the schedule of receipts. (See Schedule No. 21.) The closing balance of income cash, with the location of the deposit and the number of the pass-book, should be shown as the last item in the schedule of disbursements. (See Schedule No. 25.) It is essential that in the case of each trust the total of the schedule of receipts equal the total of the schedule of the disbursements. If there have been any sales or purchases of assets for the account of income, as in the case of Entry No. II on the synoptic of the suppositional trust which we are considering, additional schedules of such purchases and sales and of the inventory of such assets now held must be added for the trusts affected. These schedules will be in the same form as the simi lar schedules of principal. REVIEW QUESTIONS 1. What form of trustee's report is used in your state? 2. At what value are trust assets carried on the books? 3. Is it necessary to close the books to make a report? When the books are finally closed, what will be the entries? 4. Why should there be an index to the trustee's report? 5. What should be shown on the first schedule? When are the figures obtained for this schedule? 6. What arithmetical steps are needed to ascertain the amount of the principal of a trust at any time? What is the purpose of the schedules that deal with the principal? 7. What is the object of the inventory schedules? headings? What should go under each? What are the 8. What goes in the schedules of sales? 9. What goes in the schedules of purchases? 10. How are the changes in cash during the year shown? In Investments account? In the principal? What is the object of these reconciliation statements? II. What do the schedules of income show? Why must they balance? CHAPTER LXXV ACCOUNTING BY TRUST COMPANIES § 684. Separate Books for Each Estate Impossible It must be admitted that the ideal accounting system for fiduciaries is to have an individual set of books for each separate estate represented. In the case of trust companies acting as fiduciaries, however, this is impracticable because of the great amount of labor which would be required if a separate set of books were kept for each of the large number of estates for which the average bank or trust company acts. When an individual is acting in a fiduciary capacity it is strongly recommended that a complete set of books be kept, separate from all other business, but for banks and trust companies it is necessary to devise a system of accounting which will retain the most valuable advantages of the individual sets of books and yet eliminate all unnecessary details. § 685. Systems in Use by Trust Companies The method of handling individual trustees' accounts outlined in the previous chapters is equally adaptable for trust companies. All transactions are handled through the synoptic, and are posted to the trust ledgers in the usual way. For the sake of uniformity the same forms are used by trust companies and trust departments of banks in all their fiduciary functions, including administratorship, executorship, and trusteeship. Form 31 shows the rulings of synoptics in use by two such companies. It will be noticed that the first of these is what is known as a "double-page form." The upper section is the left-hand page, the lower is the right. The use of the synoptic has been explained fully. In examining Form 31 it must be remembered that each of these companies uses the same form of sheet for the trust ledger as for the synoptic. There is presented in the following sections another type of system. The forms suggested and explained in connection therewith will be found adapted to the use of the trust departments of the vast majority of banks and trust companies. § 686. The Control Sheet Form 32a is the control sheet. When the estate is taken over, all the assets should be entered in the column headed Inventory at the appraised value. If this is not available the market value as of the date of death of the decedent may be used temporarily, or if neither is available a nominal value of $1 may be accepted. The correct value should, of course, be obtained at the earliest possible moment and an adjusting entry made to carry the items at this value. The total of the entries which up to this point are all credits to corpus should be carried over to the column headed, Corpus-Credit Balance. As additional assets of the estate are taken over the same kind of entries will be made in the same way. It will be noticed that the only entries to be made on this sheet after the inventory are those which affect the corpus of the estate either by way of an increase the result of the sale of an asset at a profit over inventory price (or occasionally the discovery of an uninventoried asset)-or a decrease, the result of the sale of an asset at a loss, or the payment of a debt of the decedent, the payment of a corpus expense, or the payment of a bequest. Such changes in the amount of the corpus are provided for as follows: All expenses of administration, the payment of all debts of the decedent and all payments to beneficiaries should be entered in the column headed, Distributions, Expenses, and Debts-Debit. Any loss incurred in a sale of an asset should be entered in the column headed, Decrease-Debit. In the |