Suppose that on September 1, Bash Gyrations

Price: $3.99


P7-39B Accounting for petty cash transactions [20–30 min]

Suppose that on September 1, Bash Gyrations, a disc jockey service, creates a petty
cash fund with an imprest balance of $250. During September, Ruth Mangan, fund
custodian, signs the following petty cash tickets:


Postage for package received 30
Decorations and refreshments 10
for office party
Two boxes of stationery 25
Printer cartridges 35
Dinner money for sales manager 65
entertaining a customer

On September 30, prior to replenishment, the fund contains these tickets plus cash of
$80. The accounts affected by petty cash payments are Office supplies expense,
Entertainment expense, and Postage expense.

Requirements

1. On September 30, how much cash should this petty cash fund hold before it is
replenished?

2. Journalize all required entries to (a) create the fund and (b) replenish it. Include
explanations.

3. Make the entry on October 1 to increase the fund balance to $325. Include an
explanation.