Shawnee Co. set up a petty cash fund for payments of small amounts

Problem 8-2A (P8-2A) Shawnee Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company’s fiscal year):

May 1 Prepared a company check for $250 to establish the petty cash fund.
15 Prepared a company check both to replenish the fund for the following expenditures made since May 1 and to increase the fund to $450.
a. Paid $78 for janitorial services.
b. Paid $63.68 for miscellaneous expenses.
c. Paid postage expenses of $43.50.
d. Paid $57.15 to The County Gazette (the local newspaper) for an advertisement.
e. Counted $11.15 remaining in the petty cash box.
31 The petty cashier reports that $293.39 cash remains in the fund and decides that the May 15 increase in the fund was too large. A company check is drawn both to replenish the fund for the following expenditures made since May 15 and to reduce the fund to $400.
f. Paid postage expenses of $48.36.
g. Reimbursed the office manager for business mileage, $38.50.
h. Paid $39.75 to deliver merchandise to a customer, terms FOB destination.

Required
1. Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on those dates.

Analysis Component
2. Explain how the company’s financial statements are affected if the petty cash fund is not replenished and no entry is made on May 31.

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ACC 225 Week 8 Dane Co. establishes a $200 petty cash fund on January 1

ACC 225 Week 8

Exercise 8-5

Dane Co. establishes a $200 petty cash fund on January 1. One week later, the fund shows $28 in cash along with receipts for the following expenditures: postage, $64; transportation-in, $19; delivery expenses, $36; and miscellaneous expenses, $53. Dane 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 $500 on January 8, assuming no entry in part 2.

Check (3) Cr. Cash $472 (total)


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RPM Music Center had the following petty cash transactions in March of the current year

ACC 225 Week 8

Problems 8-3B

RPM Music Center had the following petty cash transactions in March of the current year:

March 5 Wrote a $200 check, cashed it, and gave the proceeds and the petty cashbox to Liz Buck, the petty cashier.
6 Paid $14.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. RPM uses the perpetual system to account for merchandise inventory.
11 Paid $8.75 delivery charges on merchandise sold to a customer, terms FOB destination.
12 Purchased file folders for $12.13 that are immediately used.
14 Reimbursed Will Nelson, the manager, $9.65 for office supplies purchased and used.
18 Purchased printer paper for $22.54 that is immediately used.
27 Paid $47.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
28 Paid postage expenses of $16.
30 Reimbursed Nelson $58.80 for business car mileage.
31 Cash of $11.53 remained in the fund. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures. The fund amount is also increased to $250.

Required
1. Prepare the journal entry to establish the petty cash fund.
2. Prepare a petty cash payments report for March 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 expenses in each category.
3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount.

Check (2) Total expenses $189.47
(3a & 3b) Cr. Cash $238.47


Click here for the solution: RPM Music Center had the following petty cash transactions in March of the current year