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Financial & Managerial Accounting
Found in: Page 313
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

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.

Answer

Petty cash is debited with $250.

See the step by step solution

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.

Step 2: Establishing Petty cash fund-

Date

Transaction

Debit($)

Credit($)

March 5

Petty Cash

250

Cash

250

To record establishment of Petty cash

Most popular questions for Business-studies Textbooks

Prepare a table with the following headings for a monthly bank reconciliation dated September 30.

Bank Balance Book Balance Not Shown on the Reconciliation

Add Deduct Add Deduct Adjust

For each item 1 through 12, place an x in the appropriate column to indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. If the book balance is to be adjusted, place a Dr. or Cr. in the Adjust column to indicate whether the Cash balance should be debited or credited. At the left side of your table, number the items to correspond to the following list.

1. NSF check from customer is returned on September 25 but not yet recorded by this company.

2. Interest earned on the September cash balance in the bank.

3. Deposit made on September 5 and processed by the bank on September 6.

4. Checks written by another depositor but charged against this company’s account.

5. Bank service charge for September.

6. Checks outstanding on August 31 that cleared the bank in September.

7. Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper.

8. Principal and interest on a note receivable to this company is collected by the bank but not yet recorded by the company.

9. Checks written and mailed to payees on October 2.

10. Checks written by the company and mailed to payees on September 30.

11. Night deposit made on September 30 after the bank closed.

12. Special bank charge for collection of notes in part 8 on this company’s behalf.

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