Shelton Gallery had the following petty cash transactions in February of the current year.
Feb. | 2 | Wrote a $300 check, cashed it, and gave the proceeds and the petty cashbox to Bo Brown, the petty cashier. |
| 5 | Purchased bond paper for the copier for $10.13 that is immediately used. |
| 9 | Paid $22.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Shelton uses the perpetual system to account for merchandise inventory. |
| 12 | Paid $9.95 postage to express mail a contract to a client. |
| 14 | Reimbursed Alli Buck, the manager, $58 for business mileage on her car. |
| 20 | Purchased stationery for $77.76 that is immediately used. |
| 23 | Paid a courier $18 to deliver merchandise sold to a customer, terms FOB destination. |
| 25 | Paid $15.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. |
| 27 | Paid $64 for postage expenses. |
| 28 | The fund had $21.23 remaining in the petty cash box. 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 $100 to a total of $400. |
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. Sort the payments into the appropriate categories and total the expenditures 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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