Question

B. Petty Cash Kamil Inc. maintains a petty cash fund for small expenditures. These transactions occurred during the month of August. Aug. 1 Established the petty cash fund by writing a check payable to the petty cash custodian for $250. 15 Replenished the petty cash fund by writing a check for $199.60. On this date, the fund consisted of $50.40 in cash and these petty cash receipts: freight-out $85.10, entertainment expense $42, postage expense $38.00, and miscellaneous expense $32.50. 16 Increased the amount of the petty cash fund to $400 by writing a check for $150. 31 Replenished the petty cash fund by writing a check for $372. On this date, the fund consisted of $28 in cash and these petty cash receipts: postage expense $185, entertainment expense $150.90, and freight-out $39.50. Instructions a. Journalize the petty cash transactions. b. What internal control features exist in a petty cash fund?

Answer 1

Answer
1) Journalize the petty cash transactions.
Date	Account Title and explanation	Debit	Credit
01-Aug	Petty Cash	$250.00
	Cash		$250.00
	(To establish petty cash fund)
15-Aug	Freight Out	$ 85.10
	Entertainment Expenses	$ 42.00
	Postage Expenses	$ 38.00
	Miscellaneous Expense	$ 32.50
	Cash Over and Short	$    2.00
	Cash		$199.60
	(To record cash expense)
16-Aug	Petty Cash	$150.00
	Cash		$150.00
	(To replenish petty cash)
31-Aug	Postage Expense	$185.00
	Entertainment Expense	$150.90
	Freight Out	$ 39.50
	Cash Over and Short		$    3.00
	Cash		$372.00
	(To record cash expense)
2) Post to the Petty Cash account.
Petty Cash
01-Aug	Cash	$250
16-Aug	Cash	$150
31-Aug	Balance	$400