(1) Leasehold Property having 30 years to run, producing £900 per
annum. The property, which was valued for probate at £15,000,
and which was subject to a Ground Rent of £100 per annum, was
sold on on the 24th June, 1914, for £16,400 and the proceeds
invested on the following day in Consols at 73, including
brokerage, &c.
(2) Deceased's Share in the firm of Hezekiah Hopkins & Co. This
amounted to £18,000 upon the death of Mr. Hopkins, and,
according to the Partnership Deed, was to be paid out by
instalments of £6,500 a year including interest at 5% on the
unpaid balances. The first instalment was to be paid on the
first anniversary of deceased's death.
(3) A Reversionary Interest in the Estate of his Uncle Mr. John
Oppit, the life interest of which was being enjoyed by Mrs.
Oppit. This Reversionary Interest was valued, at the death of
Mr. Hopkins for probate purposes, at £850, and was retained
until the 25th June, 1916, when it fell into possession. It then
consisted of £1,500 India 3-1/2% at 88.
(4) £10,000 invested in a Loan redeemable on the 24th June, 1915,
with interest at 10% per annum payable half-yearly on the 25th
December and the 24th June in each year.
The Trustees decided on their own responsibility to retain
this investment, which was redeemed on the due date and the
interest paid in the meanwhile.
(5) £10,000 India 3% Stock at 84, purchased by Deceased on 18th
June, 1913.
Upon the 25th June in each year the balance of Corpus Realised was to be
placed on deposit with the Hong Kong and Shanghai Bank at 4%, less any
fraction of £100 which was to be retained on Current Account at the Union
of London and Smith's Bank.
Mr. Nathaniel Hopkins died on the 25th June, 1916.
* * * * *
Write up the books showing the position of affairs when Mr. Blackside came
into the property, ignoring Income Tax.
PROBLEM No. 16.
Mrs. Wiggins was the Life Tenant and Mr. Gilbert Gunter was the
Remainderman of the Property left by the late Ebenezer Wiggins.
Mr. Gunter had begun to despair of ever enjoying the fruits of Mr.
Wiggins' generous intentions, when, fortunately for him, on the 14th
March, 1914, Mrs. Wiggins got a fish bone lodged in her gullet and died
two hours later.
The Accounts had been prepared regularly on the 21st September each year,
the anniversary of Mr. Wiggins' death, and the following is the Balance
Sheet, dated 21st September, 1913:--
EBENEZER WIGGINS Decd.
Dr. Balance Sheet, 21st September, 1913. Cr.
£ s. d. | £ s. d.
To Estate Account 33,900 0 0 |By Investments:
" Income " 125 0 0 | India 3 per Cent.:
| £25,000 at 72 18,000 0 0
| Chili 4 per Cent.:
| £5,000 at 90 4,500 0 0
| London United
| Tramways:
| £10,000 4 per Cent.
| Debentures at 70 7,000 0 0
| West African
| Trading Co., Ltd.:
| 1,000 Shares £1
| each fully paid 1,000 0 0
|" Freehold House 2,600 0 0
|" Furniture and
| Effects 800 0 0
|" Cash at Bank 125 0 0
------------ | -----------
£34,025 0 0 | £34,025 0 0
Mr. Gunter requires Accounts to be prepared, showing the position
of affairs at the 14th July, 1914, and volunteers the following
information:--
(1) The Investments remain unaltered, with the exception of the
India 3% Stock, which was sold on the 10th January, 1914, and
the proceeds, viz., £18,500, were invested in a Mortgage at 5%
Interest payable half-yearly on the 10th July and 10th January
each year.
(2) The Coupons on the Chili 4% Bonds are payable on the 1st April
and 1st October, and the Interest on the London United Tramway
Debenture Stock on the 1st January and 1st July in each year.
(3) On 3rd July, 1914, a Final Dividend at the rate of 15% per
annum, free of Tax, was declared by the West African Trading
Company, Ltd., and paid on the 8th July, 1914, making, with the
interim dividend paid on the 10th January, 1914, 10% for the
year ended 30th June, 1914, free of tax.
(4) The Freehold House was let on a full repairing lease at an
annual rental of £146, the assessment was also £146. The rent
is payable quarterly on the usual quarter days.
(5) The Trustees had paid to the late Mrs. Wiggins £75 on account
of income on the 12th day of each month, including March, 1914.
(6) The Professional Accountant's fee for writing up the books from
the 22nd September, 1913, to 14th July, 1914, and making the
necessary adjustments was agreed at 100 guineas, and this fee
was to be apportioned between Mr. Gunter and the Estate of Mrs.
Wiggins deceased equally.
* * * * *
Write up the Accounts for the period, making the necessary adjustments,
and prepare Balance Sheet dated 14th July, 1914, showing the amount due.
PROBLEM No. 17.
Mr. Montagu Summers had a conscientious objection to the Income Tax, and
a positive loathing of the Super-Tax, and the trouble lay in the fact that
he had amassed a considerable fortune in the City of London.
Something had to be done, however, to relieve Mr. Summers of a portion
of this scandalous taxation, and so, converting as much of his property
into cash as he could spare, he invested the same in various ways in other
countries.
He bought Russian 4-1/2% Bonds in Holland of the nominal value of 200,000
Guilders, and a Freehold Farm near Amsterdam, which cost in English money
about £8,000.
He bought Freehold Land in Canada, for which he paid £80,000, and
deposited with the Calgary Investment & Security Trust $300,000 at 5%.
He lent on Mortgage in New Zealand £40,000, and he had a balance of Fcs.
8,600 to his credit at the Swiss Bankverein, Berne.
[Illustration: "Mr. Montagu Summers had a conscientious objection to the
Income Tax, and a positive loathing of the Super-Tax."]
On the 14th November, 1913, Mr. Summers died of blood poisoning, the
result of cutting a corn with a blunt razor.
His property in England consisted of his Furniture and Effects valued at
£3,800, Cash balance at the London, City & Midland Bank, Queen Victoria
Street, £300, and his interest as a Partner in the firm of Montagu Summers
& Nephew, which was agreed at £32,640.
The Russian Bonds were sold on the Amsterdam Exchange for 180,000
Guilders, the Farm was valued at 112,800 Guilders, and the Land in Canada
was estimated for duty purposes at $122,000.
Assuming the Death Duties in Holland to be 5%, in Switzerland nil, and
the rates in the Colonies to be similar to what they are in this Country,
show what Estate Duty would be payable in England.