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 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 deliver a contract to a client.

14 Reimbursed Adina Sharon, the manager, \(68 for 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 cashbox. 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.

Short answer

Answer

The Petty cash account is debited with $400.

Step-by-step solution

Step-by-Step SolutionStep 1: Introduction to topic

Petty cash- Petty cash is a nominal sum protected close by to cover minor costs, such as repayments or other office-related costs. Like different funds, petty cash will likewise depend on regular reconciliations, with each transaction being kept in the official statements and other records.

Journals-

Date	Transaction	Debit($)	Credit($)
Feb 2	Petty Cash	400
	Cash		400
	To record establishment of the petty cash fund