P7-31A Suppose that on June 1, Rockin’ Gyrations, a disc jockey service, creates a petty cash fund

Suppose that on June 1, Rockin’ Gyrations, a disc jockey service, creates a petty cash fund with an imprest balance of $500. During June, Michael Martell, fund custodian, signs the following petty cash tickets:

Petty Cash Ticket Number Item Amount

1 Postage for package received $ 20

2 Decorations and refreshments for office party 25

3 Two boxes of stationery 35

4 Printer cartridges 15

5 Dinner money for sales manager entertaining a customer 75

On June 30, prior to replenishment, the fund contains these tickets plus cash of $325. The accounts affected by petty cash payments are Office supplies expense, Entertainment expense, and Postage expense.

Requirements:

1. On June 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 July 1 to increase the fund balance to $550. Include an explanation