Question

Kiona Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company's fiscal year). May 1 Prepared a company check for $350 to establish the petty cash fund. 15 Prepared a company check to replenish the fund for the following expenditures made since May 1. a. Paid $109.20 for janitorial services. b. Paid $89.15 for miscellaneous expenses. c. Paid postage expenses of $60.90. d. Paid $80.01 to The County Gazette (the local newspaper) for an advertisement. e. Counted $26.84 remaining in the petty cashbox. 16 Prepared a company check for $200 to increase the fund to $550. 31 The petty cashier reports that $375.27 cash remains in the fund. A company check is drawn to replenish the fund for the following expenditures made since May 15. f. Paid postage expenses of $59.10. g. Reimbursed the office manager for business mileage, $47.05. h. Paid $48.58 to deliver merchandise to a customer, terms FOB destination. 31 The company decides that the May 16 increase in the fund was too large. It reduces the fund by $50, leaving a total of $500. Required: 1. Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on May 16 and May 31. (Round your answers to 2 decimal places.)

Answer 1

SOLUTION

Date	Account titles and Explanation	Debit ($)	Credit ($)
May 1	Petty cash	350
	Cash		350
May 15	Janitorial expenses	109.20
	Miscellaneous expenses	89.15
	Postage expenses	60.90
	Advertising expense	80.01
	Cash over and short		16.10
	Cash (350 - 26.84)		323.16
May 16	Petty cash	200
	Cash		200
May 31	Postage expenses	59.10
	Mileage expense	47.05
	Delivery expense	48.58
	Cash over and short	20.00
	Cash (550 - 375.27)		174.73
May 31	Cash	50
	Petty cash		50