(Petty Cash, Bank Reconciliation) Bill Jovi is reviewing the cash accounting for Nottleman, Inc., a local mailing service. Jovi’s review will focus on the petty cash account and the bank reconciliation for the month ended May 31, 2017. He has collected the following information from Nottleman’s bookkeeper for this task.
Petty Cash
1. The petty cash fund was established on May 10, 2017, in the amount of \(250.
2. Expenditures from the fund by the custodian as of May 31, 2017, were evidenced by approved receipts for the following.
Postage expenses | \)33.00 |
Mailing Labels and Other Supplies | 65.00 |
I.O.U from employees | 30.00 |
Shipping charges | 57.45 |
Newspaper advertising | 22.80 |
Miscellaneous expenses | 15.35 |
On May 31, 2017, the petty cash fund was replenished and increased to \(300; currency and coin in the fund at that time totaled \)26.40.
Bank Reconciliation
THIRD NATIONAL BANK |
BANK STATEMENT |
| Disbursements | Receipts | Balance |
Balance 1 May, 2017 | | | \(8,769 |
Deposits | | \)28,000 | |
Note payment direct from customer (\(30) | | 930 | |
Check clearing during May | \)31,150 | | |
Bank service charges | 27 | | |
Balance 31 May, 2017 | | | 6,522 |
Nottleman’s Cash Account | |
Balance 1 May 2017 | \(8,850 |
Deposit during May 2017 | 31,000 |
Checks written during May 2017 | (31,835) |
Deposits in transit are determined to be \)3,000, and checks outstanding at May 31 total \(850. Cash on hand (besides petty cash) at May 31, 2017, is \)246.
Instructions
(a) Prepare the journal entries to record the transactions related to the petty cash fund for May.
(b) Prepare a bank reconciliation dated May 31, 2017, proceeding to a correct cash balance, and prepare the journal entries necessary to make the books correct and complete.
(c) What amount of cash should be reported in the May 31, 2017, balance sheet?
