Question

Nakashima Gallery had the following petty cash transactions in February of the current year.

Feb.		2		Wrote a $350 check, cashed it, and gave the proceeds and the petty cashbox to Chloe Addison, the petty cashier.
		5		Purchased bond paper for the copier for $15.35 that is immediately used.
		9		Paid $36.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashima uses the perpetual system to account for merchandise inventory.
		12		Paid $8.45 postage to express mail a contract to a client.
		14		Reimbursed Adina Sharon, the manager, $71 for business mileage on her car.
		20		Purchased stationery for $67.77 that is immediately used.
		23		Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
		25		Paid $11.40 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
		27		Paid $54 for postage expenses.
		28		The fund had $21.67 remaining in the petty cash box. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures.
		28		The petty cash fund amount is increased by $70 to a total of $420.

Required:
1. Prepare the journal entry to establish the petty cash fund.
2. Prepare a petty cash payments report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenditures in each category.
3. Prepare the journal entries for required 2 to both (a) reimburse and (b) increase the fund amount.

Answer 1