Suppose that on April, Party Gyration, a disc jockey service, creates a petty cash fund with an imprest balance of $300. During April, Michael Martell, fund custodian, sign the following petty cash tickets.

Petty Cash #/ Item/Amount
1. Postage for package received - $18.
2. Decoration and Refreshment for office party - $13.
3.Two boxes of stationery - $20.
4. Printer cartridges - $27.
5. Dinner money for sales manager entertaining a customer- $50.

On April 30, prior to replenishment, the fund contains these tickets plus cash of $170. The accounts affected by petty cash payments are Offices supplies expense, Entertainment expense, and Postage expense.

Requirement:
1. On April 30, how much cash should this petty cash fund hold before it is replenished?
2. Journalize all required entries to (a) create the funds and (b) replenish it. Include explanation.
3. Make the entry on May 1 to increase the funds balance to $400. Include an explanation.

1. Simply subtract each expenditure from the initial balance.
2. You have been given the accounts affected by the payments. Can you do that one. Then, do you know which accounts are affected when you replenish the petty cash float?
3. I'm not sure on this one, but it should be similar to a replenishment.

1. Simply subtract your amounts from the initial amount of $300

2 (a). The journal entry to create Petty Cash is:
Debit Petty Cash for 300
Credit Cash for 300

2(b) the journal entry to replinish the fund is:
Debit each Appropriate Expense account for each individual dollar amount
Credit Cash for the total amount to be replinished.

3. This will be similar to Number 2(a), so the entry will be:
Debit Petty Cash for 100
Credit Cash for 100