Question

Nakashima Gallery had the following petty cash transactions in February of the current year.

Feb.
2 Wrote a $400 check, cashed it, and gave the proceeds and the petty cashbox to Chloe Addison, the petty cashier.
5 Purchased bond paper for the copier for $14.15 that is immediately used.
9 Paid $32.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashima uses the perpetual system to account for merchandise inventory.
12 Paid $7.95 postage to express mail a contract to a client.
14 Reimbursed Adina Sharon, the manager, $68 for business mileage on her car.
20 Purchased stationery for $67.77 that is immediately used.
23 Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
25 Paid $13.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
27 Paid $54 for postage expenses.
28 The fund had $120.42 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 $100 to a total of $500.
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. (Round your answers to 2 decimal places.)
3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount. (Roundyour answers to 2 decimal places.)

Answer 1

see attachments below

Answer 2

(‘1)

Date Account Details Debit Credit

Feb 2 Petty Cash 400

Cash 400

Petty cash fund established

(‘2) Nakashima Gallery - Petty Cash Reconciliation Report for the month of February

Custodian Name- Chole Addison

Date Expense Description Amount ($)

Feb 5 Office Supplies Bond paper for copier 14.15

Feb 9 Merchandise Inventory Shipping charges as per

FOB shipping point term 32.50

Feb 12 Postage Expense Paid towards express mail for

communication with client 7.95

Feb 14 Mileage Expense Paid to Adina Sharon for

reimbursement of mileage expense 68

Feb 20 Office Supplies Stationery purchased 67.77

Feb 23 Delivery Expense Courier charges paid as per

FOB destination term for sale of merchandise 20

Feb 25 Merchandise Inventory Shipping charges as per

FOB shipping point term 13.10

Feb 27 Postage expense Postage expenses paid 54

Total Receipts to be reimbursed (a) 277.47

Total Cash on Hand 120.42

Total Cash and Receipts 397.89

Cash Short ( 400-397.89) (b) 2.11

Total to be replenished (a+b) 279.58

Please issue a cheque in the amount of $ 279.58 payable to petty cash custodians.

Sorting of Expense

Expense Amount

Delivery Expense 20

Merchandise Inventory 45.60

Mileage Expense 68

Office Supplies 81.92

Postage 61.95

Total 277.47

(‘3)

Date Account Details Debit Credit

Feb 28 Delivery Expense 20

Merchandise Inventory 45.60

Mileage Expense 68

Office Supplies 81.92

Postage 61.95

Cash Short and Over 2.11

Cash 279.58

To record the replenish of petty cash

Feb 28 Petty Cash 100

Cash 100

To record the increase in petty cash level up to $ 500.