Shawnee Co. set up a petty cash fund for payments of small amounts Problem 8-2A

Question

Shawnee Co. set up a petty cash fund for payments of small amounts Problem 8-2A (P8-2A) Shawnee Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company s fiscal year):




May 1 prepared a company check for $250.00 to establish the petty cash fund.
15 Prepared a company check to replenish the fund for the following expenditures made since May 14
a. Paid $78.00 for janitorial services.
b. Paid $63.68 for miscellaneous expenses.
c. Paid postage expenses of $43.50.
d. Paid $75.15 to the county Gazette (the local newspaper) for an advertisement.
e. Counted $11.15 remaining for petty cash.

16 Prepared a company check for $200.00 to increase the fund to $450.00.
31 The petty cashier reports that $293.39 cash remains in the fund. A company check is drawn to replenish the fund for the following expenditures made since May 15.
f. Paid postage expense of $48.36.
g. Reimbursed the office manager for business mileage, $38.50
h. Paid $39.75 to deliver merchandise to a customer, term FOB destination
31 the company decided that the May 16 increase in the funds was too large. It increased the find by $50.00, leaving a total of $400.00



1) Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase to decrease in the fund balance on May 16 and May 31.

Explanation / Answer

May 1 Prepared a company check for $300 to establish the petty cash fund. Dr Petty Cash 300 Cr Cash 300 15 Prepared a company check to replenish the fund for the following expenditures made since May 1 a. Paid $93.60 for janitorial services. b. Paid $76.41 for miscellaneous expenses. c. Paid postage expenses of $52.20. d. Paid $68.58 to The County Gazette (the local newspaper) for an advertisement. e. Counted $23.01 remaining in the petty cash box. Dr Janatorial Expense 93.60 Dr Miscellaneous Expense 76.41 Dr Postage Expense 52.20 Dr Advertising Expense 68.58 Cr Over/Short 13.80 Cr Cash 276.99 16 Prepared a company check for $200 to increase the fund to $500. Dr Petty Cash 200 Cr Cash 200 31 The petty cashier reports that $344.33 cash remains in the fund. A company check is drawn to replenish the fund for the following expenditures made since May 15. f. Paid postage expenses of $53.73. g. Reimbursed the office manager for business mileage, $42.78. h. Paid $44.17 to deliver merchandise to a customer, terms FOB destination. Dr Postage Expense 53.73 Dr Mileage Expense 42.78 Dr Freight-Out 44.17 Dr Over/Short 14.99 Cr Cash 155.67 31 The company decides that the May 16 increase in the fund was too large. It reduces the fund by $50, leaving a total of $450. Dr Cash 50 Cr Petty Cash 50

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