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    Petty Cash Fund and Bank Reconciliation

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    P8-2A Journalize and post petty cash fund transactions

    P8-3A Prepare a bank reconcilation and adjusting entries

    Journalizing and posting petty cash fund transactions

    Winningham Company maintains a petty cash fund for small expenditures. The following transactions occurred over a 2-month period.

    Jul 1 Established petty cash fund by writing a check on Cubs Bank for $200.
    15 Replenished the petty cash fund by writing a check for $196.00. On this date the fund consisted of $4.00 in cash and the following petty cash receipts: freight-out $94.00, postage expense $42.40, entertainment expense $46.60, and miscellaneous expense $11.20.
    31 Replenished the petty cash fund by writing a check for $192.00. At this date, the fund consisted of $8.00 in cash and the following petty cash receipts: freight-out $82.10, charitable contributions expense $45.00, postage expense $25.50, and miscellaneous expense $39.40.
    Aug 15 Replenished the petty cash fund by writing a check for $187.00. On this date, the fund consisted of $13.00 in cash and the following petty cash receipts: freight-out $75.60, entertainment expense $43.00, postage expense $33.00, and miscellaneous expense $37.00.
    16 Increased the amount of the petty cash fund to $300 by writing a check for $100.
    31 Replenished petty cash fund by writing a check for $284.00. On this date, the fund consisted of $16 in cash and the following petty cash receipts: postage expense $140.00, travel expense $95.60, and freight-out $47.10.

    Instructions
    (a) Journalize the petty cash transactions.
    (b) Post to the Petty Cash account.
    (c) What internal control features exist in a petty cash fund?

    Preparing a bank reconciliation and adjusting entries.

    On May 31, 2008, James Logan Company had a cash balance per books of $6,781.50. The bank statement from Farmers State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the cash account revealed the follow facts.

    1. The statement included a debit memo of $40 for the printing of additional company checks.
    2. Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Logan Company for the correct amount.
    3. Outstanding check at May 31 totaled $576.25. Deposits in transit were $1,916.15.
    4. On May 18, the company issued check No. 1181 for $685 to Barry Trest, on account. The check which cleared the bank in May, was incorrectly journalized and posted by Logan Company for $658.
    5. A $2,500 note receivable was collected by the bank for Logan Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
    6. Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak for $800 that was incorrectly charged to Logan Company by the bank.
    7. On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy Grifton, a customer, to Logan Company on account.

    Instructions
    (a) Prepare the bank reconciliation at May 31, 2008.
    (b) Prepare the necessary adjusting entries for Logan Company at May 31, 2008

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    https://brainmass.com/business/accounting/petty-cash-fund-and-bank-reconciliation-357473

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    Solution Summary

    This solution is comprised of two financial accounting problems that deal with the following:
    1) How to journalize and post petty cash fund transactions.
    2) How to prepare a bank reconciliation and adjusting entries.
    The problems shown here are taken from Financial Accounting, 6th ed., Wiley Publishing, however, the detail step-by-step explanation of these topics provides students with a clear understanding of the concepts,

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