RPM Music Center had the following petty cash transactions in March of the current year.
March. | 5 | Wrote a $200 check, cashed it, and gave the proceeds and the petty cashbox to Liz Buck, the petty cashier. |
| 6 | Paid $14.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. RPM uses the perpetual system to account for merchandise inventory. |
| 11 | Paid $8.75 delivery charges on merchandise sold to a customer, terms FOB destination. |
| 12 | Purchased file folders for $12.13 that are immediately used. |
| 14 | Reimbursed Will Nelson, the manager, $9.65 for office supplies purchased and used. |
| 18 | Purchased printer paper for $22.54 that is immediately used. |
| 27 | Paid $47.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. |
| 28 | Paid postage expenses of $16 |
| 30 | Reimbursed Nelson $58.80 for business car mileage. |
| 31 | Cash of $11.53 remained in the fund. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures. |
| 31 | The petty cash fund amount is increased by $50 to a total of $250. |
Required
1. Prepare the journal entry to establish the petty cash fund.
2. Prepare a petty cash payments report for March with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenses in each category.
3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount.
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