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 $14.55 that is immediately used. 9 Paid $38.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashina uses the perpetual system to account for merchandise inventory. 12 Paid $7.35 postage to express mail a contract to a client. 14 Reimbursed Adina Sharon, the manager, $65 for business mileage on her car. 20 Purchased stationery for $66.77 that is immediately used. 23 Paid a courier $15 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $11.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. 27 Paid $53 for postage expenses. 28 The fund had $25.67 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 $150 to a total of $490. 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.

Answer 1

1)	Date	General Journal				Debit	Credit
	2-Feb	Petty cash				340
		cash					340
		Petty cash payment Report (for February)
	Delivery expense
	23-Feb	Delivery of customer's merchandise					15
	Mileage expense
	14-Feb	Reimbursement of mileage					65
	Postage expense
	12-Feb	Express delivery of product				7.35
	27-Feb	purchased postage stamps				53	60.35
	Merchandise invnetory (transportation-in)
	9-Feb	COD charges on purchases				38.5
	25-Feb	COD charges on purchases				11.5	50
	Office supplies expense
	5-Feb	Purchased paper for copier				14.55
	20-Feb	Purchased stationery				66.77	81.32
	total						271.67
	Date	General Journal				Debit	Credit
	28-Feb	Delivery expense				15
		Mileage expense				65
		postage expense				60.35
		Merchandise inventory				50
		office supplies expense				81.32
		Cash over and short				42.66
		Cash.					314.33
	28-Feb	Petty cash				150
		csh					150