Question

Instructions

a. Journalize the petty cash transactions.

b. What internal control features exist in a petty cash fund?

C. Bank Reconciliation

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.

Answer 1

1) Journalize the petty cash transactions.

Date	Account Title and explanation	Debit	Credit
1-Aug	Petty Cash	$250
	Cash		$250
	(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
	Cash		$150
	(To replenish petty cash)
31-Aug	Postage Expense	$185.00
	Entertainment Expense	$150.90
	Freight Out	$39.50
	Cash Over and Short		$3.40
	Cash		$372.00
	(To record cash expense)

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

1. Requiring vouchers or receipts.
2. Requiring a written check to replenish the fund.
3. Having only one person (the custodian) be authorized to make payments from the fund.
4. Keeping a petty cash payments record.