A small company maintains a petty cash fund for minor expenditures. The following transactions occurred in June and July 2014:
a. The fund was established in the amount of $600.00 on June 1 from the proceeds of check no. 30.
b. On June 30, the petty cash fund had cash of $92.76 and the following receipts on hand: postage, $240.00; supplies, $149.64; delivery service, $74.40; and rubber stamp, $43.20. Check no. 1577 was drawn to replenish the fund.
c. On July 31, the petty cash fund had cash of $132.36 and the following receipts on hand: postage, $205.20; supplies, $197.04; and delivery service, $38.40. The petty cash custodian could not account for the shortage. Check no. 1628 was written to replenish the fund.
1. Prepare the journal entries necessary to record each of these transactions.
2. A charity reimburses volunteers for small out-of-pocket expenses such as parking and gasoline when the volunteers are carrying out the business of the charity. How might an imprest (petty cash) fund be helpful in controlling these expenditures?