Cheema Company maintains a petty cash fund for small expenditures. The following transactions occurred over a two-month period:

July 1 Established petty cash fund by writing a cheque on Haida Bank for $200.

July 15 Replenished the petty cash fund by writing a cheque for $194.30. On this date the fund consisted of $5.70 in cash and the following petty cash receipts:

Freight out..........................$94.00

Postage expense.....................42.40

Entertainment expense.............45.90

Supplies..............................10.70

Aug.16 Aug.31

July 31 Replenished the petty cash fund by writing a cheque for $192.00. At this date, the fund consisted of $8.00 in cash and the following petty cash receipts:

Freight out...........................$82.10

Contributions expense................30.00

Postage expense......................47.80

Repairs expense......................32.10

Aug 15 Replenished the petty cash fund by writing a cheque for $188.00. On this date, the fund consisted of $12.00 in cash and the following petty cash receipts:

Freight out............................$77.60

Entertainment expense...............30.00

Postage expense.......................47.80

Supplies.................................32.10

Aug 16 Increased the amount of the petty cash fund to $300 by writing a cheque for $100.

Aug 31 Replenished the petty cash fund by writing a cheque for $283.00. On this date, the fund consisted of $17.00 in cash and the following petty cash receipts:

Postage expense.................$145.00

Travel expense.....................90.60

Freight out..........................46.00

Instructions

Replenished the petty cash fund by writing a cheque for $188.00. On this date, the fund consisted of $12.00 in cash and the following petty cash receipts:

(a) Journalize the petty cash transactions.

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

Taking It Further

Frank Cheema believes that because a petty cash fund is established, there will no longer be a need to record any journal entries for the expenses paid using the fund. Is Frank correct? Why or why not?