Trust Income Distribution Journal Entry

If partner a had drawings during the year of 5 000 this would now need to be transferred to the capital account with the following journal.

Trust income distribution journal entry. Distribution of partnership income and drawings. This is recorded by the following entry. An end of year journal a journal entry in the accounting system to record the differences between the business s financial reporting system and the accountants end of year accounts that are used to prepare the financial statements and tax returns. On the last day of the financial year distribute income to trust beneficiaries by recording a general journal entry click your business name and choose general journals then click create journal.

Distribute the partnership income according to the arrangement explained above. On the other hand if tax exempt. The first distribution would be of salary of 3 million to be paid to indus. A trust is a legal arrangement in which one person the trustee agrees to manage financial assets on behalf of another person the beneficiary.

The distribution deduction would be 15 000. What i did is to record the journal entries as shown on some guide in myob website with 2 3100 trust to beneficiary credit and 9 9100 trust to beneficiary debit as the attached picture. Some trusts specify exactly how the trustee must distribute income while others designate several beneficiaries and allow the trustee to control income distribution. Distribute income to the beneficiaries.

Make a general journal entry on the last day of the fiscal year or in the 13th period if using 13 periods to distribute income to the beneficiaries. Debit the other expense 9 0000 accounts and credit the corresponding liability 2 0000 accounts for the amount of profit distributed to each beneficiary. Nig s profit for the year before any distribution to the partners amounts to 20 million. Case law supports a proportionate approach when there is a difference between taxable and accounting income.

However you have to be careful that the accounting and tax distributions are made in accordance with the trust distribution resolution and the trust deed. If the trust instrument of the jsa trust or state law indicates that taxable income must be distributed before tax exempt income the distribution would consist of 15 000 in taxable income and the entire 4 881 net tax exempt income would be allocated to the trust. Trust accounting procedures help trustees accurately record operating transactions in accordance with generally accepted accounting principles gaap and generally accepted. The net income of 40 000 is shared equally between the two partners by transferring 20 000 to each of the capital accounts.