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Fresh Foods established a petty cash fund of $325 on January 2. On January 31, the fund contained cash of $144.25 and vouchers for the following cash payments: Maintenance expense Office supplies Transportation expense $71.00 81.40 26.75 The three distinct accounting events affecting the petty cash fund for the period were (1) establishment of the fund, (2) reimbursements made to employees, and (3) recognition of expenses and replenishment of the fund.

Fresh Foods established a petty cash fund of $325 on January 2. On January 31, the fund contained cash of $144.25 and vouchers for the following cash payments: Maintenance expense Office supplies Transportation expense $71.00 81.40 26.75 The three distinct accounting events affecting the petty cash fund for the period were (1) establishment of the fund, (2) reimbursements made to employees, and (3) recognition of expenses and replenishment of the fund.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Required Information **The following information applies to the questions displayed below:** Fresh Foods established a petty cash fund of $325 on January 2. On January 31, the fund contained cash of $144.25 and vouchers for the following cash payments: - **Maintenance expense:** $71.00 - **Office supplies:** $81.40 - **Transportation expense:** $26.75 The three distinct accounting events affecting the petty cash fund for the period were: 1. Establishment of the fund 2. Reimbursements made to employees 3. Recognition of expenses and replenishment of the fund
Transcribed Image Text:### Required Information **The following information applies to the questions displayed below:** Fresh Foods established a petty cash fund of $325 on January 2. On January 31, the fund contained cash of $144.25 and vouchers for the following cash payments: - **Maintenance expense:** $71.00 - **Office supplies:** $81.40 - **Transportation expense:** $26.75 The three distinct accounting events affecting the petty cash fund for the period were: 1. Establishment of the fund 2. Reimbursements made to employees 3. Recognition of expenses and replenishment of the fund
### Understanding Petty Cash Accounting Events Petty cash funds are small amounts of cash kept on hand to cover minor or unexpected expenses. Three significant accounting events related to the petty cash fund for a period include: 1. **Establishment of the Fund:** Setting up and funding the petty cash account initially. 2. **Reimbursements Made to Employees:** Dispensing cash from the petty cash fund to employees for qualifying expenses. 3. **Recognition of Expenses and Replenishment of the Fund:** Recording the expenses and replenishing the petty cash fund to maintain a consistent balance. ### Required Task: **a. Show each of the three events in a horizontal statements model.** #### Instructions: 1. **Cash Flow Column:** - Indicate whether the item is an operating activity (OA), investing activity (IA), or a financing activity (FA). - Use NA to signify that an account was not affected by the event. 2. **Handling Decreases:** - Enter decreases to account balances with a minus sign (-). - Round final answers to 2 decimal places. ### Horizontal Statements Model Below is the template to model the three events for Fresh Foods: ``` FRESH FOODS Statements Model | No | Assets | = | Stockholders' | + | Revenue | - | Expense | = | Net Income | Cash Flow | | | Cash | + | Petty Cash | | Equity | | | | | | | | |----|--------------|---|-------------|---|----------------|---|---------|---|---------|---|-------------|----------------| | 1 | | | | | | | | | | | | Operating (OA) | | 2 | | | | | | | | | | | | Operating (OA) | | 3 | | | | | | | | | | | | Operating (OA) | ``` *Note: Fill in the model by identifying the effects on the respective accounts for each event.* Complete this exercise to understand how various accounting events affect different elements of the company's financial statements, ensuring an accurate portrayal of cash flows and financial position.
Transcribed Image Text:### Understanding Petty Cash Accounting Events Petty cash funds are small amounts of cash kept on hand to cover minor or unexpected expenses. Three significant accounting events related to the petty cash fund for a period include: 1. **Establishment of the Fund:** Setting up and funding the petty cash account initially. 2. **Reimbursements Made to Employees:** Dispensing cash from the petty cash fund to employees for qualifying expenses. 3. **Recognition of Expenses and Replenishment of the Fund:** Recording the expenses and replenishing the petty cash fund to maintain a consistent balance. ### Required Task: **a. Show each of the three events in a horizontal statements model.** #### Instructions: 1. **Cash Flow Column:** - Indicate whether the item is an operating activity (OA), investing activity (IA), or a financing activity (FA). - Use NA to signify that an account was not affected by the event. 2. **Handling Decreases:** - Enter decreases to account balances with a minus sign (-). - Round final answers to 2 decimal places. ### Horizontal Statements Model Below is the template to model the three events for Fresh Foods: ``` FRESH FOODS Statements Model | No | Assets | = | Stockholders' | + | Revenue | - | Expense | = | Net Income | Cash Flow | | | Cash | + | Petty Cash | | Equity | | | | | | | | |----|--------------|---|-------------|---|----------------|---|---------|---|---------|---|-------------|----------------| | 1 | | | | | | | | | | | | Operating (OA) | | 2 | | | | | | | | | | | | Operating (OA) | | 3 | | | | | | | | | | | | Operating (OA) | ``` *Note: Fill in the model by identifying the effects on the respective accounts for each event.* Complete this exercise to understand how various accounting events affect different elements of the company's financial statements, ensuring an accurate portrayal of cash flows and financial position.
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