On June 1 Meadow Salad Dressings creates a petty cash
On June 1, Meadow Salad Dressings creates a petty cash fund with an imprest balance of $400. During June, A1 Franklin, the fund custodian, signs the following petty cash tickets:
On June 30, prior to replenishment, the fund contains these tickets plus cash of $170. The accounts affected by petty cash payments are Office Supplies, Travel Expense, Delivery Expense, Entertainment Expense, and Merchandise Inventory.
1. Explain the characteristics and the internal control features of an imprest fund.
2. On June 30, how much cash should the petty cash fund hold before it is replenished?
3. Journalize all required entries to create the fund and replenish it. Include explanations.
4. Make the July 1 entry to increase the fund balance to $500. Include an explanation, and briefly describe what the custodian does.
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