7 chapter Learning Objective 4 P7-25A Accounting for petty cash transactions On
ID: 2550708 • Letter: 7
Question
7 chapter Learning Objective 4 P7-25A Accounting for petty cash transactions On June 1, Fab Salad Dressings creates a petty cash fund with an imprest balance of cash tickets: 3 June 30, Cash CR $210 Petty Cash Ticket Number 101 102 103 104 105 Item Office supplies Cab fare for executive Delivery of package across town Business dinner Merchandise inventory Amount s 30 20 50 40 90 On June 30, prior to replenishment, the fund contains these tickets plus cash of $90. The accounts affected by petty cash payments are Office Supplies, Travel Expense, Delivery Expense, Entertainment Expense, and Merchandise Inventory. Requirements 1. Explain the characteristics and the internal control features of an imprest fund. 2. On June 30, how much cash should the petty cash fund hold before it is replenished? explanations. and briefly describe what the custodian does. 3. Journalize all required entries to create the fund and replenish it. Include 4. Make the July 1 entry to increase the fund balance to $375. Include an explanationExplanation / Answer
Requirement-1
An imprest fund has petty Cash Fund balance at all times, which equals the sum of cash .plus the receipts that support payment from the funds. The internal Control feature of an imprest fund is that it identifying the amount of Money for which the fund Custodian is responsible.
Requirement -2
Computation of Petty Cash fund hold on June30 before replenished
Imprest Balance: $300
Disbursement made: $230
Balance : $70
Requirement-3 Create Imprest fund and replenished it
Journal Entry in the books of Farm Grown Salad Dressing
Date
Account & Explanation
Debit
Credit
1-June
Petty Cash
$300.00
Cash
$300.00
To record , Open the Petty Cash Fund
30-June
Office Supplies
$30.00
Cab fare for executive
$20.00
Delivery of package across town
$50.00
Business dinner
$40.00
Merchandised Inventory
$90.00
Cash Short or Over
$20.00
Cash
$210.00
To Record the expense and Cash Surplus credit and petty cash Replenished with $210
Requirment-4: Increase the fund balance to $375
Journal Entry in the books of Farm Grown Salad Dressing
Date
Account & Explanation
Debit
Credit
1-July
Petty Cash
$75
Cash
$75
To increase the cash fund balance to $400
Requirement-3 Create Imprest fund and replenished it
Journal Entry in the books of Farm Grown Salad Dressing
Date
Account & Explanation
Debit
Credit
1-June
Petty Cash
$300.00
Cash
$300.00
To record , Open the Petty Cash Fund
30-June
Office Supplies
$30.00
Cab fare for executive
$20.00
Delivery of package across town
$50.00
Business dinner
$40.00
Merchandised Inventory
$90.00
Cash Short or Over
$20.00
Cash
$210.00
To Record the expense and Cash Surplus credit and petty cash Replenished with $210
Requirment-4: Increase the fund balance to $375
Journal Entry in the books of Farm Grown Salad Dressing
Date
Account & Explanation
Debit
Credit
1-July
Petty Cash
$75
Cash
$75
To increase the cash fund balance to $400
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