Question

Nakashima Gallery had the following petty cash transactions in February of the current year. Nakashima uses the perpetual system to account for merchandise inventory. 2 Wrote a S360 check to establish a petty cash fund 5 Purchased paper for the copier for $15.75 that is immediately used 9 Paid $42.50 shipping charges (transportation -in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory 12 Paid $8.35 postage to deliver a contract to a client 14 Reimbursed Adina Sharon, the manager, $72 for mileage on her car 20 Purchased office paper for $67.77 that is immediately used. 23 Paid a courier $21 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $11.90 shipping charges (transportation -in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory 27 Paid $57 for postage expenses 28 The fund had $25.01 remaining in the petty cashbox. 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 $80 to a total of $440. Feb. 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. 3. Prepare the journal entries for required 2 to both (a) reimburse and (b) increase the fund amount.

Answer 1

1)	Date	General Journal				Debit	Credit
	2-Feb	Petty cash				360
		cash					360
		Petty cash payment Report (for February)
	Delivery expense
	23-Feb	Delivery of customer's merchandise					21
	Mileage expense
	14-Feb	Reimbursement of mileage					72
	Postage expense
	12-Feb	Express delivery of product				8.35
	27-Feb	purchased postage stamps				57	65.35
	Merchandise invnetory (transportation-in)
	9-Feb	COD charges on purchases				42.5
	25-Feb	COD charges on purchases				11.9	54.4
	Office supplies expense
	5-Feb	Purchased paper for copier				15.75
	20-Feb	Purchased stationery				67.77	83.52
	total						296.27
	Date	General Journal				Debit	Credit
	28-Feb	Delivery expense				21
		Mileage expense				72
		postage expense				65.35
		Merchandise inventory				54.4
		office supplies expense				83.52
		Cash over and short				38.72
		Cash.					334.99
	28-Feb	Petty cash				80
		csh					80