Question

Palmona Co. establishes a $270 petty cash fund on January 1. On January 8, the fund shows $171 in cash along with receipts for the following expenditures: postage, $43; transportation-in, $11; delivery expenses, $13; and miscellaneous expenses, $32. Palmona uses the perpetual system in accounting for merchandise inventory. Prepare journal entries to (1) establish the fund on January 1, (2) reimburse it on January 8, and (3) both reimburse the fund and increase it to $320 on January 8, assuming no entry in part 2. Hint: Make two separate entries for part 3.

Answer 1

Answer
Journal entry
Date	Account Titles and Explanations	Debit	Credit
01-Jan	Petty cash	$         270
	To, Cash		$         270
08-Jan	Postage expense	$           43
	Transportation	$           11
	Delivery expense	$           13
	Miscellaneous expense	$           32
	To, Cash ($270 - $171)		$           99
08-Jan	Postage expense	$           43
	Transportation	$           11
	Delivery expense	$           13
	Miscellaneous expense	$           32
	To, Cash		$           99
08-Jan	Petty Cash (320- $171)	$         149
	To, Cash		$         149