Question

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

Answer 1

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)