Question

Nakashima Gallery had the following petty cash transactions in February of the current year.
Feb.
2 Wrote a $400 check, cashed it, and gave the proceeds and the petty cashbox to Chloe Addison, the petty cashier.
5 Purchased bond paper for the copier for $14.15 that is immediately used.
9 Paid $32.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashima uses the perpetual system to account for merchandise inventory.
12 Paid $7.95 postage to express mail a contract to a client.
14 Reimbursed Adina Sharon, the manager, $68 for business mileage on her car.
20 Purchased stationery for $67.77 that is immediately used.
23 Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
25 Paid $13.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
27 Paid $54 for postage expenses.
28 The fund had $120.42 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 $500.
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. (Round your answers to 2 decimal places.)
3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount. (Roundyour answers to 2 decimal places.)

Answer 1

Answer:

(‘1)      

Date         Account Details                       Debit             Credit

Feb 2        Petty Cash                              400

                  Cash                                                            400

Petty cash fund established

(‘2)   Nakashima Gallery  - Petty Cash Reconciliation Report for the month of February

Custodian Name- Chole Addison

Date                Expense                        Description                   Amount ($)

Feb 5           Office Supplies              Bond paper for copier         14.15

Feb 9      Merchandise Inventory   Shipping charges as per

                                                     FOB shipping point term         32.50

Feb 12       Postage Expense     Paid towards express mail for

                                                 communication with client             7.95

Feb 14      Mileage Expense     Paid to Adina Sharon for

                                       reimbursement of mileage expense          68

Feb 20        Office Supplies       Stationery purchased                    67.77

Feb 23       Delivery Expense    Courier charges paid as per

                            FOB destination term for sale of merchandise      20

Feb 25    Merchandise Inventory   Shipping charges as per

                                                    FOB shipping point term         13.10

Feb 27     Postage expense        Postage expenses paid               54

Total Receipts to be reimbursed (a)                        277.47

Total Cash on Hand                                                    120.42

Total Cash and Receipts                                              397.89

Cash Short ( 400-397.89) (b)                                          2.11

Total to be replenished (a+b)                                         279.58

Please issue a cheque in the amount of $ 279.58 payable to petty cash custodians.

Sorting of Expense

Expense                              Amount              

Delivery Expense                       20        

Merchandise Inventory            45.60

Mileage Expense                      68

Office Supplies                        81.92

Postage                                    61.95

Total                                         277.47

(‘3)

Date              Account Details               Debit                     Credit

Feb 28        Delivery Expense               20

              Merchandise Inventory         45.60

                  Mileage Expense               68

                    Office Supplies              81.92

                       Postage                    61.95

              Cash Short and Over           2.11

                        Cash                                                       279.58

To record the replenish of petty cash

Feb 28             Petty Cash                   100

                         Cash                                                         100

To record the increase in petty cash level up to $ 500.