Question

Problem 6-3A Establishing, reimbursing, and increasing petty cash LO P2

Nakashima Gallery had the following petty cash transactions in February of the current year.

Feb.		2		Wrote a $400 check, cashed it, and gave the proceeds and the petty cashbox to Chloe Addison, the petty cashier.
		5		Purchased bond paper for the copier for $14.15 that is immediately used.
		9		Paid $32.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashima uses the perpetual system to account for merchandise inventory.
		12		Paid $7.95 postage to express mail a contract to a client.
		14		Reimbursed Adina Sharon, the manager, $68 for business mileage on her car.
		20		Purchased stationery for $67.77 that is immediately used.
		23		Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
		25		Paid $13.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
		27		Paid $54 for postage expenses.
		28		The fund had $120.42 remaining in the petty cashbox. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures.
		28		The petty cash fund amount is increased by $100 to a total of $500.

  
Required:
1. Prepare the journal entry to establish the petty cash fund.
2. Prepare a petty cash payments report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenditures in each category.
3. Prepare the journal entries for required 2 to both (a) reimburse and (b) increase the fund amount.

Prepare the journal entry to establish the petty cash fund.

Prepare a petty cash payments report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenditures in each category. (Round your answers to 2 decimal places.)

Prepare the journal entries for required 2 to both (a) reimburse and (b) increase the fund amount. (Round your answers to 2 decimal places.)

Answer 1

Date	Account	DEbit	credit
Feb 2	petty cash	400
	cash		400
Feb 5	office supplies expense	14.15
	cash		14.15
Feb9	merchandise inventory	32.5
	cash		32.5
Feb 12	postage expense	7.95
	cash		7.95
Feb 14	mileage expense	68
	cash		68
Feb20	office supplies expense	67.77
	cash		67.77
Feb 23	delivery expense	20
	cash		20
Feb 25	merchandise inventory	13.10
	cash		13.10
Feb 27	postage expenses.	54
	cash		54
Feb 28	cash over and short	2.11
	cash		2.11
fEB28	Petty cash	279.58
	cash [400-120.42]		279.58
Feb 28	petty cash	100
	cash		100

**Total expense : 277. 47

Petty cash balance :400-27.47=122.53

cash over or short : 122.53-120.42 =2.11