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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

On May 1 of this year, Ellsworth and Company established a Petty Cash Fund. The following petty cash transactions took place during the month:

May 1    Cashed check no. 956 for $150 to establish a Petty Cash Fund, and put the $150 in a locked drawer in the office.

3    Bought postage stamps, $8.80, voucher no. 1 (Miscellaneous Expense).

4    Issued voucher no. 2 for taxi fare, $12 (Miscellaneous Expense).

6    Issued voucher no. 3 for delivery charges on outgoing parts, $15.

9    B. Ellsworth, the owner, withdrew $25 for personal use, voucher no. 4.

13    Paid $8.29 for postage, voucher no. 5 (Miscellaneous Expense).

19    Bought pens for office, $6, voucher no. 6.

23    Paid $3.59 for a box of staples, voucher no. 7.

28    Paid $15 for window cleaning service, voucher no. 8 (Miscellaneous Expense).

29    Paid $2 for pencils for office, voucher no. 9.

31    Issued for cash check no. 1098 for $95.68 to reimburse Petty Cash Fund.

Required

  1. 1. Journalize the entry establishing the Petty Cash Fund in the general journal.
  2. 2. Record the disbursements of petty cash in the petty cash payments record.
  3. 3. Journalize the summarizing entry to reimburse the Petty Cash Fund.

Check Figure

Office Supplies, $11.59

1.

To determine

Journalize the issue of check for petty cash fund establishment.

Explanation

Petty cash fund: Petty cash fund is a fund established to pay insignificant amounts like postage, office supplies, and lunches. In day-to-day life, it becomes difficult to use checks for daily expenses.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Prepare journal entry for the issue of check for petty cash fund establishment.

DateAccount Titles and ExplanationPost...

2.

To determine

Prepare a petty cash payments report of Company E for the month of May.

3.

To determine

Journalize the transaction for reimbursement of petty cash fund.

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