Question

answer required 1-3

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 $340 check to establish a petty cash fund. 5 Purchased paper for the copier for $16.55 that is immediately used. 9 Paid $32.se shipping charges (transportation-in) on merchandise purchased for resale, terns FOB shipping point. These costs are added to merchandise Inventory. 12 Paid $7.05 postage to deliver a contract to a client. 14 Reimbursed Adina Sharon, the manager, $68 for mileage on her car 20 Purchased office paper for $66.77 that is immediately used. 23 Paid a courier $22 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $10.40 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory. 27 Paid $57 for postage expenses. 28 The fund had $26.27 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 $140 to a total of 5480 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
Feb 2	Petty cash	$340
	Cash		$340
	(To record petty cash)

2)

NAKASHIMA GALLERY
Petty Cash Payments Report (for February)
Delivery expense
Feb 23	Delivery to customer's merchandise		$22
Mileage expense
Feb 14	Reimbursement for mileage		68
Postage expense
Feb 12	Deliver a contact to a client	7.05
Feb 27	Purchase postage stamps	57	64.05
Merchandise inventory (transportation-in)
Feb 9	Shipping charges on purchases	32.50
Feb 25	Shipping charges on purchases	10.40	42.90
Office supplies expense
Feb 5	Purchased paper for copier	16.55
Feb 20	Purchased office paper	66.77	83.32
Total			$280.27

3)

Date	General Journal	Debit	Credit
Feb 28	Delivery expense	$22
	Mileage expense	$68
	Postage expense	$64.05
	Merchandise inventory	$42.90
	Office supplies expense	$83.32
	Cash over and short (313.73-280.27)	$33.46
	Cash (340-26.27)		$313.73
	(To record reimbursement of petty cash fund)
Feb 28	Petty cash	$140
	Cash		$140
	(To record increase in petty cash fund)

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