In: Accounting
Valley Hardware (Mr. M. Jordan is the sole proprietor) established a petty cash fund on January 1, 2018. A cheque for $400 payable to cash was given to Kate, the petty cashier, who went to the bank and brought back $400 and put it in the petty cash box. The following transactions were completed during January. Jan 1 Purchased business cards for $36 (this business records office supplies as expenses upon purchase) Jan 10 Paid $60 for repairs to the office photocopier Jan 15 Paid $66 COD charges on merchandise to be resold to customers (the business uses the periodic inventory system) Jan 15 Purchased paper for the printer, $37 Jan 20 Paid $45 for an advertisement in the local January newspaper Jan 25 M. Jordan took $90 from the cash box to pay for a personal gift for his mother Jan 26 Paid $40 delivery charges on merchandise inventory sold to a customer Jan 28 Paid $16 for stamps used for mailing cheques to its suppliers. The money in the petty cash box was counted on January 31, and its total was $8. The fund was replenished and increased by $100 on January 31.
A. Prepare the journal entry to record the establishment of the petty cash fund . EXPLANATION IS REQUIRED B. Prepare a summary of petty cash payments (also known as the Petty Cash Payments Report) for January . Hint: This is not a complete list of general ledger accounts to use, but some of these may be useful to you: (Office supplies expense, merchandise inventory or transportation - in (pick one), postage expense, delivery expense, repairs expense) C. Prepare the journal entry to record the reimbursement of the petty cash fund, and to increase the size of the fund by $100.00 . EXPLANATION IS REQUIRED
Petty Cash (Summary)
Date | Particulars | Amount | Date | Particulars | Amount |
Jan1 | To Cash A/c | 400 | Jan 1 | By office Supplies | 36 |
Jan 30 | To Cash A/c | 100 | Jan 10 | By Repairs Expense A/c | 60 |
Jan 15 | By Delivery Expense | 66 | |||
Jan 15 | Office Supplies | 37 | |||
Jan 20 | Advertisment Expense | 45 | |||
Jan 25 | Drawings A/c | 90 | |||
Jan 26 | Delivery Expense | 40 | |||
Jan 28 | Offioce Supplies | 16 | |||
By Balance c/d | 108 | ||||
Total | 500 | Total | 500 |
General Journal
Date | Particulars | Debit Amount | Credit Amount |
Jan 1 | Office Supplies A/c Dr. | 36 | |
To Petty Cash | 36 | ||
(Being business card purchased from petty cash fund recorded as office supplies) | |||
Jan 10 | Repairs Expense A/c Dr. | 60 | |
To Petty Cash A/c | 60 | ||
(Being repairs expenses paid from petty cash fund) | |||
Jan 15 | Delivery Expense A/c Dr. | 66 | |
To Petty Cash A/c | 66 | ||
(Paid COD for delivery expense fr0m Petty cash fund) | |||
Jan 15 | Office Supplies A/c Dr. | 37 | |
To Petty Cash A/c | 37 | ||
(Being purchased paper from printer from petty cash) | |||
Jan 20 | Advertisement Expense A/c Dr | 45 | |
To Petty Cash A/c | 45 | ||
(Being advertismeent expense paid from petty cash fund) | |||
Jan 25 | Drawings A/c Dr | 90 | |
To Petty Cash | 90 | ||
(Being drawings made by Jordan friom petty cash fund) | |||
Jan 26 | Delivery Expense A/c Dr | 40 | |
To Petty Cash A/c | 40 | ||
(Being delivery charges paid on merchandise from petty cash fund) | |||
Jan 28 | Office Supplies A/c Dr | 16 | |
To Petty Cash A/c | 16 | ||
(Being office supplies made from petty cash fund) | |||
Jan 28 | Petty Cash A/c Dr. | 100 | |
To Cash a/c | 100 | ||
(Being petty cash fund replenished by $100) |