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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

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

Answer

(a) Journal entry is passed for reimbursement in step 2

(b) Petty cash fund is increased by $50, and the journal entry is passed in step 2

See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: Introduction to topic

Petty cash- A petty cash fund always has a little amount of money, which is used to pay minor expenses of the business. Petty cash is a current asset and should be recorded on the company balance sheet.

Step 2: Journal entries for part (a) and (b)-

Date

Transactions

Debit($)

Credit($)

Mar. 31(a)

Delivery Expense

10.75

Mileage Expense

56.80

Postage Expense

18.00

Merchandise Inventory

57.60

Office Supplies Expense

46.32

Cash Over and Short

1.00

Cash

188.47

To reimburse the petty cash fund.

Mar. 31(b)

Petty Cash

50.00

Cash

50.00

To increase the petty cash fund.

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