Suppose that, on June 1, Devine Design creates a petty cash fund with an imprest balance of $400. During June, Lucie Chao, the fund custodian, signs the following petty cash tickets:

On June 30, prior to replenishment, the fund contains these tickets plus $34.40. The accounts affected by petty cash payments are Office Supplies Expense, Travel Expense, Delivery Expense, and Entertainment Expense.
Required
1. Explain the characteristics and 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. Make general journal entries to
(a) Create the fund
(b) 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 in this case.

Transcribed Image Text:

101 102 103 104 105 Office supplies Cab fare for e Delivery of package across town Dinner money for sales manager entertaining a customer Office supplies Amount $26.64 60.00 29.32 133.34 1772) 2