Advanced Method
Step 13: Update the share accounts.
The record-keeper should first make a new payments account for the lot being auctioned:
Charge winning bidders the second highest bid or the reserve price, whichever is higher. Notice that winning outside bidders will always pay the reserve price, which is the amount they bid.
List all these charges in the payments account for the lot and total them.
Allocate the total to the recipients according to the shares assigned them in Step 1.
Example #1:
Next, the record-keeper should update the share accounts:
In the cash section of each share account, subtract charges for all the items that a recipient received from that lot from the cash balance so far.
In the cash section, also add the recipient's share of the payments account.
Sum the cash entries to find the new cash balance in each account.
Add any items won to the property section of the recipient's share account.
Add the cash balance to the value of the property won in that lot to find each recipient's share after that lot.
Check to make sure that the recipients' shares after that lot are the same percentage of the whole as the shares they were assigned in Step 1.
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Notice that each recipient ends up with cash and property worth $875, which is appropriate since they're getting equal shares. If these values aren't equal, then the record-keeper should check his or her calculations. When the share accounts are completed, the record-keeper should show all the recipients their share accounts:
Example #2:
Here's the payments account for the Nappi auction, in which $90,000 and four items were distributed. Jack receives 1/2 of the estate, Sophie 1/3, and the church 1/6. There are no entitlements or outside bidders. In the auction, Jack won the house, Sophie the quilt and car, and the church the ABC stock.
Here are the share accounts for this auction:
Notice that the Nappi estate has a total value of $122,100 (Jack's share) + $81,400 (Sophie's share) + $40,700 (the church's share) = $244,200. Jack's share is $122,100/$244,200, or 1/2 of the total. Sophie's is $81,400/$244,200, or 1/3 of the total. The church's is $40,700/$244,200, or 1/6 of the total.
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Copyright © 2004 Lori Alden. All rights reserved.