Question

Almona Co. establishes a $140 petty cash fund on January 1. On January 8, the fund shows $31 in cash along with receipts for the following expenditures: postage, $47; transportation-in, $12; delivery expenses, $14; and miscellaneous expenses, $36. Palmona uses the perpetual system in accounting for merchandise inventory.
Prepare journal entries to establish the fund on January 1.
Prepare journal entry to reimburse the petty cash fund on January 8.
Prepare journal entries to both reimburse the fund and increase it to $450 on January 8, assuming no entry in part 2.

Answer 1

Answer and Explanation:

The Journal entries are as follows:

On January 1

Petty cash    Dr. $140

       To cash                               $140

(Being the petty cash fund is recorded)

On January 8

Postage expense                Dr. $47

Merchandise inventory         Dr. $12

Delivery expense               Dr. $14

Miscellaneous expenses     Dr. $36

           To Cash                                                      $109

(Being the reimbursement of the petty cash fund is recorded)

On January 8

Petty cash     Dr. $450

             To cash                               $450

(being the increase in petty cash fund is recorded)

Only these three entries are recorded