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 $15.75 that is immediately used. 9 Paid $44.50 shipping charges transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory. 12 Paid $7.55 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 $69.77 that is immediately used. 23 Paid a courier $24 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $11.30 shipping charges (transportation-in) on merchandise purchased for resale, terns yoB shipping point. These costs are added to merchandise inventory. 27 Paid $59 for postage expenses. 28 The fund had $26.15 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 $50 to a total of $410. 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

Nakashima Gallery
Date		General Journal	Debit ($)	Credit ($)
Feb	2	Petty cash fund A/c Dr.	360.00
			Bank A/c		360.00
Feb	5	Office supplies Expense A/c Dr.	15.75
			Petty cash fund A/c		15.75
Feb	9	Merchandise inventory A/c Dr.	44.50
			Petty cash fund A/c		44.50
Feb	12	Postage Expense A/c Dr.	7.55
			Petty cash fund A/c		7.55
Feb	14	Milege Expense A/c	71.00
			Petty cash fund A/c		71.00
Feb	20	Office supplies Expense A/c Dr.	69.77
			Petty cash fund A/c		69.77
Feb	23	Delivery Expense A/c Dr.	24.00
			Petty cash fund A/c		24.00
Feb	25	Merchandise inventory A/c Dr.	11.30
			Petty cash fund A/c		11.30
Feb	27	Postage Expense A/c Dr.	59.00
			Petty cash fund A/c		59.00
Feb	28	Petty cash fund A/c Dr.	302.87
			Bank A/c		302.87
Feb	28	Petty cash fund A/c Dr.	50.00
			Bank A/c		50.00

Nakashima Gallery
Petty Cash Payment Report (for February)
Delivery Expense
Feb 23	Petty cash fund	24.00
			24.00
Milege Expense
Feb 14	Petty cash fund	71.00
			71.00
Postage Expense
Feb 12	Petty cash fund	7.55
Feb 27	Petty cash fund	59.00
			66.55
Merchandise inventory
Feb 9	Petty cash fund	44.50
Feb 25	Petty cash fund	11.30
			55.80
Office supplies Expense
Feb 5	Petty cash fund	15.75
Feb 20	Petty cash fund	69.77
			85.52
Total	302.87