Question

Blues Music Center had the following petty cash transactions in March of the current year. March 5 Wrote a \(250 check, cashed it, and gave the proceeds and the petty cashbox to Jen Rouse, the petty cashier.

6 Paid \)12.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Blues uses the perpetual system to account for merchandise inventory.

11 Paid \(10.75 in delivery expense on merchandise sold to a customer, terms FOB destination.

12 Purchased office file folders for \)14.13 that are immediately used.

14 Reimbursed Bob Geldof, the manager, \(11.65 for office supplies purchased and used.

18 Purchased office printer paper for \)20.54 that is immediately used.

27 Paid \(45.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.

28 Paid postage expense of \)18.

30 Reimbursed Geldof \(56.80 for mileage expense.

31 Cash of \)61.53 remained in the fund. Sorted the petty cash receipts by accounts affected and

exchanged them for a check to reimburse the fund for expenditures.

31 The petty cash fund amount is increased by \(50 to a total of \)300.

Required

1. Prepare the journal entry to establish the petty cash fund.

Short answer

Answer

Petty cash is debited with $250.

Step-by-step solution

Step-by-Step SolutionStep 1: Introduction to topic

Petty cash establishment: Organizations allocate responsibility regarding the petty cash fund to an individual called the petty cash custodian. A cheque should be written to a petty cash custodian by somebody to form a petty cash fund and then cashes the check and keeps the cash in a locked cash box.

Establishing Petty cash fund-

Date	Transaction	Debit($)	Credit($)
March 5	Petty Cash	250
	Cash		250
	To record establishment of Petty cash