Question

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

Feb.		2		Wrote a $340 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 $15.35 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 $8.65 postage to express mail a contract to a client.
		14		Reimbursed Adina Sharon, the manager, $71 for business mileage on her car.
		20		Purchased stationery for $69.77 that is immediately used.
		23		Paid a courier $19 to deliver merchandise sold to a customer, terms FOB destination.
		25		Paid $10.80 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
		27		Paid $58 for postage expenses.
		28		The fund had $25.77 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 $470.

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.
Required-1,2 and 3

Answer 1

Date	Account	Debit	credit
Feb 2	petty cash	340
	cash		340
	[being petty cash fund established]

2)Petty cash Report

Delivery expense
Feb 23 Delivery of customer merchandise	19
Mileage expense
Feb 14 Reimbursement for mileage	71
postage expense
Feb 12 mail a contract to client	8.65
Feb 27 postage stamps	58
merchandise inventory
Feb 9 charges on purchase	32.50
Feb 25	10.8
office supplies
Feb 5 Bond paper	15.35
Feb 20 stationery	69.77
Total	285.07

3)

Date	Account	Debit	credit
feb 28	Delivery expense	19
	mileage expense	71
	postage expense [8.65+58]	66.65
	merchandise inventory [32.5+10.8]	43.3
	office supplies [15.35+69.77]	85.12
	cash over and short [314.23-285.07]	29.16
	cash [340-25.77]		314.23

Feb 28	petty cash	130
	cash		130
	[Fund balance increased]