Question

Shelton Gallery had the following petty cash transaction in February of the current year Feb 2 Wrote a $300 check, cash it and gave the proceeds and the petty cashbox to Bo Brown, the petty cash cashier Feb 5 Purchase bond paper for the copier for $10.13 that is immediately used. Feb 9 Paid $22.50 COD shipping charge on merchandise purchased for resale, terms FOB shipping point. Shelton uses the perpetual system to account for merchandise inventory. Feb 12 Paid $9.95 postage to express mail a contract to a client. Feb 14 Reimbursed Alli Buck, the manager, $58 for business mileage on her car. Feb 20 Purchased Stationary for $77.76 that is immediately used. Feb 23 Paid a courier $18 to deliver merchandise sold to a customer terms FOB shipping. Feb 25 Paid $15.10 COD shipping charges on merchandise purchased for resale, term FOB shipping point Feb 27 Paid $64 for postage expense. Feb 28 the fund had $21.23 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. Feb 28 the petty cash fund amount is increased by $100 to a total of $400. Required: 1. Prepare the journal entry to establish the petty cash fund. 2. Prepare the journal entries to both (a) reimburse and (b) increase the fund amount.

Answer 1

No.	Date	Account Titles and Explanation	Debit	Credit
1	Feb. 02	Petty Cash	300
		Cash		300
		(To record establishment of petty cash fund)
2(a)	Feb. 28	Stationary expenses ($10.13 + $77.76)	87.89
		Merchandise inventory ($22.50 + $15.10)	37.60
		Postage expenses ($9.95 + $64)	73.95
		Mileage expenses	58.00
		Delivery expenses	18.00
		Cash short and over	3.33
		Cash ($300 - $21.23)		278.77
		(To record replenishment of petty cash fund)
2(b)	Feb. 28	Petty Cash	100
		Cash		100
		(To record increase in petty cash fund balance)