Question

almona Co. establishes a $200 petty cash fund on January 1. On January 8, the fund shows $38 in cash along with receipts for the following expenditures: postage, $74; transportation-in, $29; delivery expenses, $16; and miscellaneous expenses, $43. 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 $450 on January 8, assuming no entry in part 2. Hint: Make two separate entries for part 3.

Answer 1

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Answer 2

Answer: Please see answer in explanation column

Step-by-step explanation:

1`. To record establishment of fund

Date Account titles and explanation Debit Credit

Jan 1 Petty cash $200

Cash $200

2.To record the reimbursement the petty cash fund.

Date Account titles and explanation Debit Credit

Jan 8 Postage expense $74

Merchandise inventory $29

Delivery expense $16

Miscellaneous expenses $43

Cash $162

Date Account titles and explanation Debit Credit

Jan 08 Petty cash $250

Cash $250

calculation

Petty cash= $450-$200 = $250