Question

 Exercise 8-10 Petty cash fund accounting LO P2

 Palmona Co. establishes a $270 petty cash fund on January 1. On January 8, the fund shows $187 in cash along with receipts for the following expenditures: postage, $36; transportation-in, $10; delivery expenses, $12; and miscellaneous expenses, $25. Palmona uses the perpetual system in accounting for merchandise inventory.

 Prepare journal entries to (1) establish the fund on January 1, (2) reimburse it on January 8, and (3) both reimburse the fund and increase it to $320 on January 8, assuming no entry in part 2. Hint: Make two separate entries for part 3.

Answer 1

Question:-

Parts	Date	General Journal	Debit	Credit
1	January 1	Petty Cash	$270
		Cash		$270
	Being Cash added to Petty cash Account
					2	January 8	Postage	$36
Transportation-in	$10
Delivery expenses	$12
Miscellaneous Expenses	$25
Petty Cash		$83
Being Petty cash used/Reimbursed for Business expenditures
				3 (i)		January 8	Petty Cash	$50
Cash		$50
Being Cash increased to Petty cash Account
					3 (ii)	January 8	Postage	$36
Transportation-in	$10
Delivery expenses	$12
Miscellaneous Expenses	$25
Petty Cash		$83
Being Petty cash used/Reimbursed for Business expenditures

Assumption, Increase in cash is done before the expenditure occurred.

In the first entry of part 3, The petty cash is increased to $ 320 and than the Reimbursement of expenses is done.

Thanks and Regards