P7-2A

Arial Ltd. maintains a petty cash fund for small expenditures. The following transactions occurred over a 2-month period.

July 1 Established petty cash fund by writing a check on Coulter Bank for 200. 15 Replenished the petty cash fund by writing a check for 198.00. On this date, the fund consisted of 2.00 in cash and the following petty cash receipts: freight-out 87.00, postage expense 51.40, entertainment expense 46.60, and miscellaneous expense 11.20.

31 Replenished the petty cash fund by writing a check for 192.00. At this date, the fund consisted of 8.00 in cash and the following petty cash receipts: freight-out 82.10, charitable contributions expense 45.00, postage expense 25.50, and miscellaneous expense 39.40.

Aug. 15 Replenished the petty cash fund by writing a check for 187.00. On this date, the fund consisted of 13.00 in cash and the following petty cash receipts: freight-out 75.60, entertainment expense 43.00, postage expense 33.00, and miscellaneous expense 37.00.

16 Increased the amount of the petty cash fund to 300 by writing a check for 100.

31 Replenished the petty cash fund by writing a check for 277.00. On this date, the fund consisted of 23 in cash and the following petty cash receipts: postage expense 133.00, travel expense 95.60, and freight-out 47.10

Instructions (a) Journalize the petty cash transactions.

(b) Post to the Petty Cash account.

(c) What internal control features exist in a petty cash fund?