You have been hired as trustee for the testamentary trust created by the will of Jimmy Olson. The trust is created on July 22, 2011. (Use the information provided in P 23-1) The trust initially invests the proceeds from the estate in a checking account that pays 3 percent per year. Interest is paid monthly. On July 23, the trust invests $300,000 in a certificate of deposit at Metropolis National Bank. The certificate earns 6 percent interest per year, paid monthly. On July 25, the trust invests $500,000 in the Super Stock Mutual Fund. On July 31, the trust invests $100,000 in 10-year 10 percent Small Ville Municipal Bonds, which mature on July 31, 2018. The bonds pay interest semiannually on January 31 and July 31. On August 22, you receive a check for $1,500, representing one month’s interest on the certificate of deposit. On August 23, you receive the statement on the checking account indicating a deposit of $405 for one month’s interest on the checking account. The statement also indicates the bank’s monthly fee of $100 for maintaining the trust. On August 31, you send a check to Lois Olson for $3,700 to cover her monthly living expenses.
REQUIRED
Prepare the entry to record the creation of the Olson trust on July 22. Prepare all additional required entries to account for trust activities through August 31.