Question

1) Plenty Co. established a petty cash fund of $150 on October 1. On October 10, the petty cash fund was replenished when there was $49 remaining and there were petty cash receipts for: office supplies, $47; transportation-in on inventory purchased, $32; and postage, $22. On October 15, the petty cash fund was decreased to $125 in total. Plenty Co. uses the perpetual inventory system. Record the above transactions in general journal form

Answer 1

To record the transactions for Plenty Co.'s petty cash fund, entries are made to establish the fund, replenish it with expenses, and decrease the fund amount accordingly.

Step-by-step explanation:

The student has presented a situation involving the establishment, replenishment, and adjustment of a petty cash fund for Plenty Co. To record these transactions in the general journal, you must first set up the petty cash fund, then record the replenishment which includes expenses for office supplies, transportation, and postage, and finally adjust the fund to a new amount.

On October 1, the petty cash fund is established:

• Debit Petty Cash $150
• Credit Cash $150

On October 10, the petty cash fund is replenished with the given receipts and remaining cash:

• Debit Office Supplies $47
• Debit Transportation-In $32
• Debit Postage $22
• Credit Cash $101

On October 15, the petty cash fund is decreased:

• Debit Cash $25
• Credit Petty Cash $25

Note that Transportation-In costs are associated with the delivery of inventory and should be recorded as part of inventory cost under a perpetual inventory system.