Question

Fresh Foods established a petty cash fund of $100 on January 2. On January 31, the fund contained cash of $9.20 and vouchers for the following cash payments: Maintenance expense Office supplies Transportation expense $61.50 12.50 15.00 The three distinct accounting events affecting the petty cash fund for the period were (1) establishment of the fund, (2) reimbursements made to employees, and (3) recognition of expenses and replenishment of the fund.Required:
a. Record each of the three events in a horizontal statements model.b. Record the events in general journal format.

Answer 1

Answer:

a. Net total assets = Stockholder's equity = $18.40; Total Expenses = Net income = ($90.80); and Net Cash flow = $18.40

b. Record the events in general journal format.

See the journal entries below.

Explanation:

a. Record each of the three events in a horizontal statements model.

Note: See the attached excel file for the horizontal statements

b. Record the events in general journal format.

The journal general entries will be as follows:

Date          Details                                     Dr ($)                  Cr ($)    

Jan. 2       Petty cash account                100.00

                Cash                                                                    100.00

                (To record the petty cash fund establishment.)                

Jan. 2-31   Maintenance expense           61.50

                 Office supplies                       12.50

                 Transportation expense        15.00

                 Unaccounted amount (w.2.)    1.80

                  Petty cash account                                             90.80

                 (To record expenses during the month of January.)        

Jan. 31      Petty cash account               90.80

                Cash                                                                      90.80

                (To record reimbursements made to employees.)            

Workings:

w.1. Reimbursed amount = Petty cash fund - Fund balance on January 31 = $100 - $9.20 = $90.80

w.2. Unaccounted amount = Reimbursed amount - Maintenance expense - Office supplies - Transportation expense = $90.80 - $61.50 - $12.50 - $15.00 = $1.80.