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

3. Prepare the journal entries (in dollars and cents) for part 2 to both (a) reimburse and (b) increase the fund amount.

Short answer

Answer

(a) Total expenditure, including unrecorded expenses is $ 297.58

(b) Petty cash is increased by $100.

Step-by-step solution

Step-by-Step SolutionStep 1: Meaning of Petty Cash Fund

Petty Cash Fund is a small amount of cash that a business keeps set aside to pay minor expenses.

Journals reimburse –

(a)

Date	Transaction	Debit($)	Credit($)
	Delivery Expense	61.95
	Mileage Expense	20
	Postage Expense	68
	Merchandise Inventory	45.6
	Office Supplies Expense	81.92
	Cash Over and Short	20.11
	Cash		297.58
	To reimburse the petty cash fund.

Journals increase the fund amount-

(b)

Date	Transaction	Debit($)	Credit($)
Feb 28	Petty Cash	100
	Cash		100
	To increase the petty cash fund