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 $350 check to establish a petty cash fund. 5 Purchased paper for the copier for $15.15 that is immediately used. 9 Paid $42.50 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory. 12 Paid $8.55 postage to deliver a contract to a client. 14 Reimbursed Adina Sharon, the manager, $71 for mileage on her car. 20 Purchased office paper for $68.77 that is immediately used. 23 Paid a courier $16 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $11.70 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory. 27 Paid $53 for postage expenses. 28 The fund had $25.69 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 $120 to a total of $470. 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.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter11: Accounting For Purchases And Cash Payments

Section: Chapter Questions

Problem 10SPB: CASH PAYMENTS TRANSACTIONS Kay Zembrowski operates a retail variety store. The books include a...

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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 $350 check to establish a petty cash fund.
	5	Purchased paper for the copier for $15.15 that is immediately used.
	9	Paid $42.50 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory.
	12	Paid $8.55 postage to deliver a contract to a client.
	14	Reimbursed Adina Sharon, the manager, $71 for mileage on her car.
	20	Purchased office paper for $68.77 that is immediately used.
	23	Paid a courier $16 to deliver merchandise sold to a customer, terms FOB destination.
	25	Paid $11.70 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory.
	27	Paid $53 for postage expenses.
	28	The fund had $25.69 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 $120 to a total of $470.

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.

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