Suppose that on June 1, Cool Gyrations, a disc jockey service, creates a petty cash fund with an imprest balance of \(\$ 300\). During June, Carol McColgin, fund custodian, signs the following petty cash tickets:

On June 30, prior to replenishment, the fund contains these tickets plus cash of \(\$ 170\). The accounts affected by petty cash payments are Office Supplies Expense, Entertainment Expense, and Postage Expense.

Requirements 

1. Explain the characteristics and the internal control features of an imprest fund.

2. On June 30, how much cash should this petty cash fund hold before it's replenished?
3. Make general journal entries to

(a) create the fund 

(b) replenish it. Include explanations.

4. Make the entry on July 1 to increase the fund balance to \(\$ 350\). Include an explanation, and briefly describe what the custodian does. 

Transcribed Image Text:

Petty Cash Ticket Number 1 2 3 34 4 5 Item Postage for package received Decorations and refreshments for office party Two boxes of stationery Printer cartridges Dinner money for sales manager entertaining a customer Amount $18 13 20 27 50