Inoke Gallery had the following petty cash transactions in February of the current year:?

Question

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. Metro 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.
The fund amount is also increased to $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.

Sandy · Accepted Answer

1. Prepare the journal entry to establish the petty cash fund.
Dr  Petty cash $300
Cr  Cash $300

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.
Petty cash payments report for February

5 Office supplies expense $10.13
9 Merchandise inventory $22.50 - COD shipping charges 
12 Postage expense $9.95
14 Mileage expense - Alli Buck $58
20 Office supplies expense $77.76
23 Delivery expense $18
25 Merchandise inventory $15.10
27 Postage expense $64
Total spent $275.44
(There should be $24.56 remaining in the cash box but there is only $21.23, so there is a shortage of $3.33, which will be taken to office supplies expense since cash shortage is not one of the categories given)

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. The fund amount is also increased to $400.

Sort the payments into the appropriate categories and total the expenditures in each category.

Office supplies expense $91.22
Merchandise inventory $37.60
Postage expense $73.95
Mileage expense $58.00
Delivery expense $18.00
Total disbursed $278.77


3. Prepare the journal entries for part 2 to both 
(a) reimburse 

Dr  Office supplies expense $91.22
Dr  Merchandise inventory $37.60
Dr  Postage expense $73.95
Dr  Mileage expense $58.00
Dr  Delivery expense $18.00
Cr  Petty cash $278.77

and (b) increase the fund amount.

Dr  Petty cash $378.77
Cr  Cash $378.77
(to reimburse $278.77 and increase the fund to $400)

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Inoke Gallery had the following petty cash transactions in February of the current year:?

1 Answer