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Petty Cash

Inoke Gallery had the following petty cash transactions in February of the current year:

Feb. 2 Wrote a $300 check, cashed it, and gave the proceeds and the petty cashbox to Bo Brown, the petty cashier.

5 Purchased bond paper for the copier for $10.13 that is immediately used.

9 Paid $22.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Metro uses the perpetual system to account for merchandise inventory.

12 Paid $9.95 postage to express mail a contract to a client.

14 Reimbursed Alli Buck, the manager, $58 for business mileage on her car.

20 Purchased stationery for $77.76 that is immediately used.

23 Paid a courier $18 to deliver merchandise sold to a customer, terms FOB destination.

25 Paid $15.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.

27 Paid $64 for postage expenses.

28 The fund had $21.23 remaining in the petty cash box. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures. The fund amount is also increased to $400.

Required
1. Prepare the journal entry to establish the petty cash fund.

2. Prepare a petty cash payments report for February with these categories: delivery expense,
mileage expense,
postage expense,
merchandise inventory (for transportation-in), and
office supplies expense.

Sort the payments into the appropriate categories and total the expenditures in each category.

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

Solution Summary

The solution explains the journal entries relating to petty cash fund.

$2.19