em 7-2A Establishing, reimbursing, and Increasing the petty cash fund Lo4 2017:
ID: 2574241 • Letter: E
Question
em 7-2A Establishing, reimbursing, and Increasing the petty cash fund Lo4 2017: 2 Prepared a $400 cheque, cashed it, and gave the proceeds and the petty cash box to Nick Reed. Feb. the petty cashier. Purchased paper for the copier, $22.45. 5 q Paid $36.80 COD charges on merchandise purchased for resale. Assume Milton Consulting uses method to account for merchandise inventory. 12 Paid $15.65 postage to express mail a contract to a client. 14 Reimbursed Kim Marm, the manager of the business, $1.35.00 for business auto expenses. 20 Purchased stationery, $58.70. 23 Paid a courier $32.45 to deliver merchandise sold to a customer. 25 Paid $37.80 COD charges on merchandise purchased for resale. 28 Paid $50.00 for stamps. 28 Reed sorted the petty cash receipts by accounts affected and exchanged them for a cheque to reimburse the fund for expenditures. However, there was only $8.15 in cash in the fund. In addition, the size of the petty cash fund was increased to $500. Required 1. Prepare a journal entry to record establishing the petty cash fund. 2. Prepare a summary of petty cash payments, similar to Exhibit 8.2 that has these categories: delivery expense, auto expense, postage expense, merchandise inventory, and office supplies. Sort the payments into the appropriate categories and total the expenditures in each category. 3 Prepare the journal entry to record the reimbursement and the increase of the fund. Analysls Component: One of your responsibilities as an employee with Milton Consulting is to handle the petty cash fund. You are concerned about the auto expense claims made regularly by Kim Marn, the man- ager who hired you: Kim tells you how much the expenditures were and you give her the cash out of petty cash. Kim has never given you receipts to substantiate her claims. The owner of the business is visiting and asks you how things are going. What should you do, if anything? Explain. 503Explanation / Answer
Workings:
Analysis:
First reimburesemnts should be according to the policy document of the organisation and supportings for claims should be taken. Every time a reimbursement has been given for some expense supporting document should be taken and acknowledgement from the receipient should also be taken. If the process is not followed then it's point less explaining and covering up the mistakes, it's always required to take supportings for the claims else reject the claims irrespective of the person making the claim.
Date Account Debit Credit Feb.2 Petty cash 400 Cash 400 [ Petty cash fund established] Feb Delivery expense 32.45 Auto expense 135.00 Postage expense 15.65 Offce supplies 131.15 Merchandise expense 74.60 Petty cash 388.85 [ Expenses recorde] Feb.28 Petty cash 491.85 Cash 491.9 [petty cash fund reimbursed= 500-8.15]Related Questions
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