On September 1, Cool Salad Dressings creates a petty cash fund with an imprest balance of $250. During September, Michael Martell, the fund custodian, signs the following petty cash tickets:

On September 30, prior to replenishment, the fund contains these tickets plus cash of $65. The accounts affected by petty cash payments are Office supplies expense, Travel expense, Delivery expense, Entertainment expense, and Inventory.
Requirements
1. Explain the characteristics and the internal control features of an imprest fund.
2. On September 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 October 1 entry to increase the fund balance to $300. Include an explanation, and briefly describe what the custodiandoes.

Transcribed Image Text:

Petty Cash Ticket Number Item Amount Office supplies 30 101 Cab fare for executive 102 20 Delivery of package across town Dinner money for city manager to entertain the mayor 103 35 104 25 Inventory 105 80