Question

Nakashima Gallery had the following petty cash transactions in February of the current year. Feb. 2 Wrote a $360 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 $16.55 that is immediately used. 9 Paid $40.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashima uses the perpetual system to account for merchandise inventory. 12 Paid $7.15 postage to express mail a contract to a client. 14 Reimbursed Adina Sharon, the manager, $69 for business mileage on her car. 20 Purchased stationery for $67.77 that is immediately used. 23 Paid a courier $22 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $11.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. 27 Paid $55 for postage expenses. 28 The fund had $25.97 remaining in the petty cash box. 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 $130 to a total of $490. 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.

Answer 1

Part-1)

		Debit	Credit
Feb-02	Petty cash	360
	Cash		360

Part-2)

	Petty Cash Payments Report
	Delivery expenses
Feb-23	Delivery of customer's merchandise		22
	Mileage expenses
Feb-14	Reimbursement for mileage		69
	Postage expenses
Feb-12	Express delivery of contract	7.15
Feb-27	Purchased postage stamps	55	62.15
	Merchandise inventory (transportation-in)
Feb-09	COD charges on purchases	40.5
Feb-25	COD charges on purchases	11.1	51.6
	Office supplies expense
Feb-05	Purchased paper for copier	16.55
Feb-20	Purchased stationery	67.77	84.32
			289.07

Part-3)

	Debit	Credit
Delivery expense	22.00
Mileage expense	69.00
Postage expense	62.15
Merchandise inventory	51.60
Office supplies expense	84.32
Cash over and short	44.96
Cash		334.03
Petty cash	130.00
Cash		130.00