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Financial & Managerial Accounting
Found in: Page 310
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

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.

Answer

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

(b) Petty cash is increased by $100.

See the step by step solution

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.

Step 2: 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.

Step 3: Journals increase the fund amount-

(b)

Date

Transaction

Debit($)

Credit($)

Feb 28

Petty Cash

100

Cash

100

To increase the petty cash fund

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