Question

enn During lune Ruth Manann the fund custodian, signs the following petty cash petty cash tickets.) ment, the fund contains these Terchandise Inventory i Data Table Х ffice Supplies, Travel Expense, Deli aracteristics and the internal Petty Cash Ticket Number 101 Item Amount balance at all times, which pport payments from the fund. The tit the ar Office supplies Cab fare for executive Delivery of package across town Business dinner w much cash should the pe y cash fund should hold cas Merchand se inventory quired entries to create the Select the explanation on the last Done ny number in the input fields a

Answer 1

Valley Salad Dressings Requirement 1 An imprest fund has the same balance at all times, which equals the sum of cash in the fund plus the total of the slips that support payments from the fund. The internal control feature of an imprest fund is that it clearly identifies the amount of money for which the fund custodian is responsible. Requirement 2 Recall that the petty cash fund's balance should be the same at all times. The fund balance should be the sum of the cash in the fund plus the total of the tickets. Use this table and the data in the problem to calculate what the cash in the fund should be. Fund Balance Less:Petty Cash Tickets Petty Cash on hand 300 245

Requirement 3 Journal Enteries Date Particulars Jun-01 Petty Cash a/c Dr. To Cash (To open petty cash fund) Debit in $ Credit in $ 300 300 Remember that the sum of the cash plus the total value of the tickets should equal the fund balance at all times. If this sum exceeds the fund balance, there is a cash overage. If the sum is less than the fund balance, there is a cash shortage. Use the following table to determine the cash overage or shortage (cash missing). 300 Fund Balance Cash on Hand Petty Cash Tickets Total Accounted for Amount of Cash missing or cash coverage 70 245 315 15 Payments decrease the fund, so periodically the fund must be replenished. To replenish the petty cash fund, you need to bring the cash on hand up to $300—the imprest balance. We are told that the cash on hand amounts to $70. Therefore, to replenish the account, the company writes a check, pavable to Petty Cash. and credit the Cash account by the difference between these two amounts (=$300 - $70). The petty cash tickets tell you what to debit. Refer to the petty cash ticket information provided in the problem. To replenish the fund we must debit Office Supplies for $15, debit Travel Expense for $25, and so on. Note from the calculation in the preceding step that there was a $15 cash overage for the period —the total cash accounted for exceeded the fund balance by $15. For this situation, we need a $15 credit to make the journal entry balance, a gain, which is credited to Cash Short and Over account. Go ahead and prepare the entry. (Prepare a single compound journal entry.) Debit in $ Credit in $ Journal Enteries Date Particulars Jun-30 Office Supplies a/c Dr. Travel Expense a/c Dr. Delivery Expense a/c Dr. Entertainment Expense a/c Dr. Merchandise Inventory a/c Dr. To Cash Short and Over To Cash (To replenish Petty cash fund) 230 Requirement 4 Make an entry on July 1 to increase the fund balance to $500. Include an explanation. The entry is similar to the entry to create the fund. The entry will increase the Petty Cash account and decrease the Cash account by the amount of the increase in the fund balance (=$500 - $300). Go ahead and prepare the entry. Journal Enteries Date Particulars Jul-01 Petty Cash a/c Dr. To Cash (To open petty cash fund) Debit in $ Credit in $ 200 200