Nakashima Gallery had the following petty cash transactions in February of the current year. Nakashima uses the perpetual system to account for merchandise inventory. Feb. 2 Wrote a $360 check to establish a petty cash fund. 5 Purchased paper for the copier for $16.15 that is immediately used. 9 Paid $44.50 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory. 12 Paid $7.35 postage to deliver a contract to a client. 14 Reimbursed Adina Sharon, the manager, $70 for mileage on her car. 20 Purchased office paper for $68.77 that is immediately used. 23 Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $11.60 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory. 27 Paid $57 for postage expenses. 28 The fund had $22.23 remaining in the petty cashbox. 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 $130 to a total of $490. 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. 3. Prepare the journal entries for required 2 to both (a) reimburse and (b) increase the fund amount. Wrote a $360 check to establish a petty cash fund.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Nakashima Gallery had the following petty cash transactions in February of the current year. Nakashima uses the perpetual system to account for merchandise inventory.

Feb.	2	Wrote a $360 check to establish a petty cash fund.
	5	Purchased paper for the copier for $16.15 that is immediately used.
	9	Paid $44.50 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory.
	12	Paid $7.35 postage to deliver a contract to a client.
	14	Reimbursed Adina Sharon, the manager, $70 for mileage on her car.
	20	Purchased office paper for $68.77 that is immediately used.
	23	Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
	25	Paid $11.60 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory.
	27	Paid $57 for postage expenses.
	28	The fund had $22.23 remaining in the petty cashbox. 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 $130 to a total of $490.

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.
3. Prepare the journal entries for required 2 to both (a) reimburse and (b) increase the fund amount.

Wrote a $360 check to establish a petty cash fund.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Feb 02

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