Recording the activities of a trust. Prior to his death, Gordon Mayer created a trust for the benefit of his two children, Gretta and Gary. At date of death, all assets of the estate and related liabilities would pass to the trust. The trust contains the following provisions:

  1. Fifty percent of the trust income in the year of the decedent’s death and for the following calendar year will be paid to Gretta. Payments will be made at year-end.
  2. Fifty percent of the trust income in the year of the decedent’s death and for the next two calendar years will be held on behalf of Gary. The accumulated trust income, less applicable trust income taxes, will be disbursed to Gary in the month following the end of the final calendar year to which this provision relates.
  3. On the one-month anniversary of the decedent’s death, $200,000 will be conveyed to the Cedarburg Community Library. In the first month following the year of the decedent’s death, 40% of the principal balance measured as of the prior year-end will be conveyed to St. Cecil’s Community Hospital.
  4. All costs associated with managing the trust’s investments in stocks and bonds will be charged to principal.
  5. All dividends and interest earned subsequent to the date of the decedent’s death will be included in income.
  6. Fees and expenses incurred by the trustee for administration purposes will be allocated equally between trust principal and income.
  7. All capital improvements to maintain rental properties in good condition will be charged against trust principal.
  8. All normal maintenance costs associated with rental properties will be charged against trust income.
  9. The interest portion of mortgage payments on rental properties accruing after the date of death will be allocated equally between trust principal and income.
  10. Depreciation will not be considered in determining trust income.
  11. On November 1 in each of the two calendar years following the year of the decedent’s death, $25,000 will be contributed to the Boy Scouts of America.
  12. All taxes associated with the decedent’s estate and final income are to be paid out of the trust principal.

Gordon Mayer died on September 18, 20X6, when his estate consisted of the following assets at fair value: cash—$32,000; stocks and bonds—$570,000; rental properties—$1,234,000. The following additional events occurred subsequent to his death during 20X6:

a. Estate taxes in the amount of $256,000 and final personal income taxes in the amount of $27,000 were paid in 20X6.

b. Dividends and interest were received on investments in the amounts of $23,000 and $27,000, respectively. Of the dividends, $13,000 was declared as payable to shareholders of record as of September 15, 20X6. The interest received included $8,400 of accrued interest as of the decedent’s death.

c. Stocks with a fair value of $320,000 at date of death were sold for $335,000.

d. A new roof and siding were installed on rental properties in the amount of $134,000. Ordinary repairs on rental properties were $25,000, of which $6,700 had been incurred prior to the decedent’s death.

e. Expenses associated with managing the trust’s investment in stocks and bonds totaled $9,200, and the trustee’s expenses were $6,000.

f. Mortgage payments on rental property totaled $94,000, of which $45,000 represented interest. Of the interest, $8,200 represented interest that had accrued as of the date of the decedent’s death.

g. Gross rents of $124,000 were received.

h. Estimated taxes of $21,434 were paid on trust income which was not distributed.

Prepare all necessary entries to record the activities of the trust subsequent to the decedent’s death through the end of 20X6.

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