Question

Exercise 7-8 Petty cash fund L04 Dallas Repairs completed the following petty cash transactions during July 2020: July 5 6 12 14 18 Prepared a $250 cheque, cashed it and turned the proceeds and the petty cash box over to Elliott Grace, the petty cash custodian. Paid $18.00 courier fees. Purchased file folders, $12.50. Reimbursed Dara Bains, the manager of the business, $34.26 for office supplies purchased. Purchased paper for printer, $42.15. Purchased stamps, $23.00 Reimbursed Dara Bains $64.80 for business car expenses. Elliott Grace sorted the petty cash receipts by accounts affected and exchanged them for a cheque to reimburse the fund for expenditures. However, there was $51.04 in cash in the fund. R Pur 30 31 Required 1. Prepare a general journal entry to record establishing the petty cash fund. 2. Prepare a summary of petty cash payments similar to Exhibit 7.2 that has these categories: delivery expense, auto expense, postage expense, merchandise inventory, and office supplies. 3. Prepare the general journal entry to record the reimbursement of the fund.

Answer 1

General Journal Entry to record establishing the petty cash fund
5-Jul	Cash A/c	Dr.	$250
	To Bank A/c			$250
	(Withdrawing Cash from bank to Establish Petty Cash)
	Petty Cash A/c	Dr.	$250
	To Cash A/c			$250
	(Establishing Petty Cash A/c)
6-Jul	Delivery Expenses A/c	Dr.	$18
	To Cash A/c			$18
	(Paid for courier fees)
12-Jul	Office Supplies A/c	Dr.	$12.50
	To Cash A/c			$12.50
	(purchased file folders)
14-Jul	Office Supplies A/c	Dr.	$34.26
	To Cash A/c			$34.26
	(reimbursement for office supplies purchased)
18-Jul	Office Supplies A/c	Dr.	$42.15
	To Cash A/c			$42.15
	(purchased paper for printer)
28-Jul	Postage Expenses A/c	Dr.	$23.00
	To Cash A/c			$23.00
	(purchased Stamps)
30-Jul	Auto Expenses A/c	Dr.	$64.80
	To Cash A/c			$64.80
	(Reimbursed Dara Bains for business car expenses)
				$194.71	250
31-Jul	Cash Over and Short A/c	Dr.	$4.25
	To Cash A/c
	( petty cash balance of $250 deducted by all expenses i.e total of $194.71 should $55.29, but there is $51.04 which is shortage of $4.25)

Dallas Repairs
Petty Cash Book
Receipt	Date	Details	Vch. No	Total	Delivery Expenses	Auto Expenses	Postage Expenses	Merchandise Inventory	Office Supplies
	2020			$	$	$	$	$	$
250	5-Jul	Cash
	6-Jul	Courier Fees	1	$18	$18
	12-Jul	File folders	2	$12.50					$12.50
	14-Jul	reimbursement	3	$34.26					$34.26
	18-Jul	Paper for printers	4	$42.15					$42.15
	28-Jul	Stamps	5	$23.00			$23.00
	30-Jul	Reimbursement for car	6	$64.80		$64.80
				194.71	18	64.8	23	0	88.91
		Balance C/d		55.29
$250.00				250