Question

Problem 6-3A Establishing, reimbursing, and increasing petty cash LO P2 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 $350 check to establish a petty cash fund. 5 Purchased paper for the copier for $16.35 that is immediately used. 9 Paid $38.50 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory. 12 Paid $7.45 postage to deliver a contract to a client. 14 Reimbursed Adina Sharon, the manager, $67 for mileage on her car. 20 Purchased office paper for $67.77 that is immediately used. 23 Paid a courier $22 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $12.10 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 $23.22 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 $130 to a total of $480. 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				350
		cash					350
		Petty cash payment Report (for February)
	Delivery expense
	23-Feb	Delivery of customer's merchandise					22
	Mileage expense
	14-Feb	Reimbursement of mileage					67
	Postage expense
	12-Feb	Express delivery of product				7.45
	27-Feb	purchased postage stamps				58	65.45
	Merchandise invnetory (transportation-in)
	9-Feb	COD charges on purchases				38.5
	25-Feb	COD charges on purchases				12.1	50.6
	Office supplies expense
	5-Feb	Purchased paper for copier				16.35
	20-Feb	Purchased stationery				67.77	84.12
	total						289.17
	Date	General Journal				Debit	Credit
	28-Feb	Delivery expense				22
		Mileage expense				67
		postage expense				65.45
		Merchandise inventory				50.6
		office supplies expense				84.12
		Cash over and short				37.61
		Cash.					326.78
	28-Feb	Petty cash				130
		csh					130