Nakashima Gallery had the following petty cash transactions in February of the current year. Feb. 2 Wrote a $ 400 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 $ 14.15 that is immediately used. 9 Paid $ 32.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashima uses the perpetual system to account for merchandise inventory.
12 Paid $ 7.95 postage to express mail a contract to a client. 14 Reimbursed Adina Sharon, the manager, $ 68 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 $ 13.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
27 Paid $ 54 for postage expenses.
28 The fund had $ 120.42 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 $ 100 to a total of $ 500.
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 (in dollars and cents) for part 2 to both (a) Reimburse
(b) Increase the fund amount.