Question

Brown Co set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May. May 1 Prepared a company check for $350 to establish the petty cash fund. May 15 Prepared a company check to replenish the fund for the following expenditures made since May 1. a. Paid $114 for janitorial services. b. Paid $85 for miscellaneous expenses. c. Paid postage expenses of $57. d. Paid $28 to Facebook for advertising expense. e. Counted $74 remaining in the petty cash box. May 16 Prepared a company check for $150 to increase the fund to $500. May 31 The petty cashier reports that $200 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 $174. g. Reimbursed the office manager for business mileage, $87. h. Paid $29 to deliver merchandise to a customer, terms FOB destination. May 31 The company decides that the May 16 increase in the fund was too large. It reduces the fund by $120, leaving a total of $380.

Answer 1

Brown Co.

Date	General Journal	Debit	Credit
May-01	Petty cash	350
	Cash		350
	(To record establishment of petty cash fund)
May-15	Janitorial expenses	114
	Miscellaneous expense	85
	Postage expense	57
	Advertising expense	28
	Cash short and over		8
	Cash ($350 - $74)		276
	(To record replenishement of petty cash fund)
May-16	Petty cash	150
	Cash		150
	(To record increase in petty cash fund balance)
May-31	Postage expense	174
	Mileage expense	87
	Delivery expense	29
	Cash short and over	10
	Cash ($500 - $200)		300
	(To record replenishment of petty cash fund)
May-31	Cash	120
	Petty Cash		120
	(To record decrease in petty cash fund balance)

Note: The general ledger and trial balance tabs should get automatically updated with the journal entries recorded.

Transaction	Impact transaction has on net income:	Amount of increase (decrease)
May 1)	No effect	0
May 15)	Decrease	-276
May 16)	No effect	0
May 31)	Decrease	-300
May 31)	No effect	0
In total, net income increased (decreased) by:		-576

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