The Specialty Store started its $250 imprest (petty cash) fund on the morning of

Question

The Specialty Store started its $250 imprest (petty cash) fund on the morning of March 5th. It was immediately popular and throughout the month the following transactions occurred:

March 6 Freight charges on inventory ...... $80

March 8 Postage Expense .....................$35

March 12 Entertainment Expense ........ $73

March 15 Employee Advance............... $25

March 25 Sales Return...........................$28

On March 30th, when the fund custodian requested replenishment, $8 and the related receipts & vouchers were in the cashbox. On the same day, the custodian requested that the fund balance be increased to $275.

Prepare general journal entries to record the establishment of the fund, the reimbursment, and any modification to the fund balance.

Explanation / Answer

(a) On March 5,

  Particulars Debit($) Credit ($)

Petty Cash Account Dr. 250

To Cash Account 250

(Being estalishment of Petty Cash Fund & cash received by Petty cashier.)

(b) On March 6,

  Particulars   Debit($)   Credit ($)

Freight charges on inventory Account Dr. 80

To Petty Cash Account 80

(Being Freight charges on inventory, paid)

(c) On March 8,

     Particulars   Debit($)   Credit ($)

  Postage Expense Account Dr. 35

    To Petty Cash Account 35

(Being Postage Expense, paid)

(d) On March 12,

Particulars   Debit($)   Credit ($)

  Entertainment Expense Account Dr. 73

To Petty Cash Account 73

(Being Entertainment Expense, paid)

(e) On March 15,

     Particulars   Debit($)   Credit ($)

  Employee Advance Account Dr. 25

    To Petty Cash Account 25

(Being  amount paid as Employee Advance)

(f) On March 25,

  Particulars   Debit($)   Credit ($)

  Sales Return. Account Dr. 28

    To Petty Cash Account 28

(Being  amount paid to customer for goods return)

(g) On March 30,

  Particulars   Debit($)   Credit ($)

  Cash Short or Excess Account Dr. 1

To Petty Cash Account 1

(Being  short amount of $1 is recorded & written off)

(h) On March 30,

  Particulars   Debit($)   Credit ($)

  Petty Cash Account Dr. 242

To Cash Account 242

(Being replenishment of expended amount of petty cash fund)

(i) On March 30,

  Particulars   Debit($)   Credit ($)

  Petty Cash Account Dr. 25

To Cash Account 25

(Being enhancement of fund petty cash fund limit)

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