a. Luo Yang is concerned with control over mail receipts at Yang’s Tools. All mail receipts are opened by Rong Hu. Rong sends the checks to the accounting department, where they are stamped “For Deposit Only.” The accounting department records and deposits the mail receipts weekly. Luo asks for your help in installing a good system of internal control over mail receipts.

b. Wilkinson Company established a $100 petty cash fund on August 1. On August 31, the fund had $7 cash remaining and petty cash receipts for postage $31, office supplies $42, and miscellaneous expense $16. Prepare journal entries to establish the fund on August 1 and replenish the fund on August 31.