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.

Feb.		2		Wrote a $360 check to establish a petty cash fund.
		5		Purchased paper for the copier for $16.35 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 $8.95 postage to deliver a contract to a client.
		14		Reimbursed Adina Sharon, the manager, $71 for mileage on her car.
		20		Purchased office paper for $68.77 that is immediately used.
		23		Paid a courier $18 to deliver merchandise sold to a customer, terms FOB destination.
		25		Paid $11.60 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory.
		27		Paid $58 for postage expenses.
		28		The fund had $22.66 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 $100 to a total of $460.

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

	Answer
1	Part-1: Journal Entry- Nakashima Gallery
	Date	Account Tittle	Debit	credit
	02-Feb	Petty Cash	$       360
		cash		$        360
		To Record Petty Cash Fun Established

2	2)Petty cash Report- Naashima Gallery
	Particular	Amount	Amount
	Delivery expense
	Feb 23:- Courier Charges	$         18	$          18
	Mileage expense
	Feb 14 :- Reimbursement for Car	$         71	$          71
	Postage Expense
	Feb 12: Deliver a contract to client	$      8.95
	Feb 27 :postage Expense	$         58	$     66.95
	Merchandised Inventory
	Feb 9: Shipping Charges	$    42.50
	Feb 25: Shipping Charges	$    11.60	$     54.10
	office supplies
	Feb 5 : Purchase copier Paper	$    16.35
	Feb 20 : Office Paper	$    68.77	$     85.12
	Total		$   295.17

Part-3: Journal Entry- Nakashima Gallery
Date	Accoutn Tittle	Debit	credit
28-Feb	Delivery expense	$         18
	Mileage Expense	$         71
	Postage Expense	$    66.95
	Merchandised Inventory	$    54.10
	Office Supplies	$    85.12
	cash over and short (337.34-18-71-66.95-54.10-85.12]	$    42.17
	cash (360-22.66)		$   337.34
	(To Record Expenses)
28-Feb	petty cash	$       100
	cash		$        100
	(To Record Increase petty Cahs Fund )

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