Exercise 6-10 (Algo) Petty cash fund accounting LO P2 Palmona Company establishes a $180 petty cash fund on January 1. On January 8, the fund shows $89 in cash along with receipts for the following expenditures: postage, $36; transportation-in, $14; delivery expenses, $16; and miscellaneous expenses, $25. Palmona uses the perpetual system in accounting for merchandise inventory. 1. Prepare the entry to establish the fund on January 1. 2. Prepare the entry to reimburse the fund on January 8 under two separate situations: a. To reimburse the fund. b. To reimburse the fund and increase it to $230. Hint Make two entries. No 1 2 3 4 Date January 01 January 08 January 08 January 08 Petty cash Cash Postage expense Transportation-in Delivery expense Miscellaneous expenses Cash short and over Cash Postage expense Transportation-in Delivery expense Miscellaneous expenses Cash short and over Cash Petty cash i Cash Answer is not complete. General Journal ●● 100000 100000 00 Debit 180 360 140 160 250 20 360 140 16 250 20 50- Credit 180 91 0 91 50

So, before coming to the topic of cash books, I will let you briefly explain about the cash so that you all can be familiar with the word cash. Cash comes under the category of the current asset which is used as a medium of exchange for all the financial…