Question

Palmona Co. establishes a $140 petty cash fund on January 1. On January 8, the fund shows $29 in cash along with receipts for the following expenditures: postage, $46; transportation-in, $14; delivery expenses, $16; and miscellaneous expenses, $35. Palmona uses the perpetual system in accounting for merchandise inventory. Prepare journal entries to (1) establish the fund on January 1, (2) reimburse it on January 8, and (3) both reimburse the fund and increase it to $190 on January 8, assuming no entry in part 2. Hint: Make two separate entries for part 3.

Answer 1

Answer:

Entries are posted

Explanation:

We will record assets and expenses on the debit as they increase during the year and will record liabilities and capital on the credit side as they increase during the year or vice versa.

January 1 (Cash fund being recorded in petty cash)

Account                                   Debit         Credit

Petty Cash                              $140

Cash                                                            $140

January 8

Postage                                   $46

transportation-in                     $14

delivery expenses,                  $16

miscellaneous expenses,       $35

Cash                                                               $111

January 8 ( petty cash funds being increased )

Pettcash                                  $50

Cash                                                               $50