Shelton Gallery had the following petty cash transactions in February of the cur

Question

Shelton Gallery had the following petty cash transactions in February of the current year. Feb. 2 Wrote a $350 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 $15.95 that is immediately used. 9 Paid $40.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Shelton uses the perpetual system to account for merchandise inventory. 12 Paid $8.35 postage to express mail a contract to a client. 14 Reimbursed Alli Buck, the manager, $75 for business mileage on her car. 20 Purchased stationery for $69.27 that is immediately used. 23 Paid a courier $18 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $12.00 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. 27 Paid $56 for postage expenses. 28 The fund had $23.22 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. 28 The petty cash fund amount is increased by $120 to a total of $470. Prepare the journal entry to establish the petty cash fund.Prepare a petty cash payments report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenditures in each category. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) 3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount.

Explanation / Answer

Part 1:

Journal Entry to establish the petty cash fund:

Petty Cash a/c                                 DR         $350

   To Cash a/c                                                                     $350

Part 2:

Petty Cash Payments Report:

Date

Particulars

Amount ($)

Feb 2

Opening Balance

350

Less: Payments

Office Supplies Expense:

Feb 5

Purchase of Bond Paper

15.95

Merchandise Inventory:

Feb 9

COD Shipping Charges

40.50

Postage:

Feb 12

Postage to express mail

8.35

Mileage Expense:

Feb 14

Reimbursement to manager

75

Office Supplies Expense:

Feb 20

Purchased Stationery

69.27

Postage Expense:

Feb 23

Courier

18

Merchandise Inventory:

Feb 25

COD Shipping Charges

12

Postage Expense:

Feb 27

Postage Expense

56

Others:

Feb 28

Other Expenses

31.71

326.78

Feb 28

Closing Balance

23.22

Cash balance addition

446.78

Closing Balance

470

Part 3:

(a)Journal Entry for reimbursement:

Cash a/c                                                        Dr                          $23.22

                   To Petty Cash a/c                                                                               $23.22

(b)Journal Entry to increase the fund amount:

Petty Cash a/c                                                Dr                   $470

               To Cash a/c                                                                                                $470

Date

Particulars

Amount ($)

Feb 2

Opening Balance

350

Less: Payments

Office Supplies Expense:

Feb 5

Purchase of Bond Paper

15.95

Merchandise Inventory:

Feb 9

COD Shipping Charges

40.50

Postage:

Feb 12

Postage to express mail

8.35

Mileage Expense:

Feb 14

Reimbursement to manager

75

Office Supplies Expense:

Feb 20

Purchased Stationery

69.27

Postage Expense:

Feb 23

Courier

18

Merchandise Inventory:

Feb 25

COD Shipping Charges

12

Postage Expense:

Feb 27

Postage Expense

56

Others:

Feb 28

Other Expenses

31.71

326.78

Feb 28

Closing Balance

23.22

Cash balance addition

446.78

Closing Balance

470

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