Part 1: Prepare journal entries to record the establishment of the fund on April 1 and its replenishments on April 15 and April 30. Part 2: Explain how the company's financial statements would be affected if the petty cash fund were not replenished and no entry were made on April 30. (Hint: The amount of office supplies that appears on a balance sheet is determined by a physical count of the supplies on hand.)
Part 1: Prepare journal entries to record the establishment of the fund on April 1 and its replenishments on April 15 and April 30. Part 2: Explain how the company's financial statements would be affected if the petty cash fund were not replenished and no entry were made on April 30. (Hint: The amount of office supplies that appears on a balance sheet is determined by a physical count of the supplies on hand.)
Part 1: Prepare journal entries to record the establishment of the fund on April 1 and its replenishments on April 15 and April 30. Part 2: Explain how the company's financial statements would be affected if the petty cash fund were not replenished and no entry were made on April 30. (Hint: The amount of office supplies that appears on a balance sheet is determined by a physical count of the supplies on hand.)
Instructions The following petty cash transactions were noted by the petty cashier as occurring during April 2005: April 1- Received a company cheque for $250 to establish the petty cash fund. April 15- Received a company cheque to replenish the fund for the following expenditures made since April 1 and to increase the fund to $450 a. Paid $78 for janitorial service. b. Purchased office supplies for $63.68 c. Purchased postage stamps for $43.50 d. Paid $57.15 to the County Crier for an advertisement in the newspaper. e. Discovered that $11.15 remained in the petty cash box. April 30- The petty cashier noted that $333.39 remained in the fund and decided that the April 15 increase in the fund was too large. Therefore, a company cheque was drawn to replenish the fund for the following expenditures made since April 15 to reduce the fund to $400. f. Purchased office supplies for $48.36 g. Reimbursed office manager for business auto, $28.50 h. Paid $39.75 courier charges to deliver merchandise to a customer. Required: Part 1: Prepare journal entries to record the establishment of the fund on April 1 and its replenishments on April 15 and April 30. Part 2: Explain how the company's financial statements would be affected if the petty cash fund were not replenished and no entry were made on April 30. (Hint: The amount of office supplies that appears on a balance sheet is determined by a physical count of the supplies on hand.) Click here to download the spreadsheet to complete this activity.
Transcribed Image Text:Instructions
The following petty cash transactions were noted by the petty cashier as occurring during April 2005:
April 1- Received a company cheque for $250 to establish the petty cash fund.
April 15- Received a company cheque to replenish the fund for the following expenditures made
since April 1 and to increase the fund to $450
a. Paid $78 for janitorial service.
b. Purchased office supplies for $63.68
c. Purchased postage stamps for $43.50
d. Paid $57.15 to the County Crier for an advertisement in the newspaper.
e. Discovered that $11.15 remained in the petty cash box.
April 30- The petty cashier noted that $333.39 remained in the fund and decided that the April 15
increase in the fund was too large. Therefore, a company cheque was drawn to replenish the fund for
the following expenditures made since April 15 to reduce the fund to $400.
f. Purchased office supplies for $48.36
g. Reimbursed office manager for business auto, $28.50
h. Paid $39.75 courier charges to deliver merchandise to a customer.
Required:
Part 1: Prepare journal entries to record the establishment of the fund on April 1 and its
replenishments on April 15 and April 30.
Part 2: Explain how the company's financial statements would be affected if the petty cash fund were
not replenished and no entry were made on April 30. (Hint: The amount of office supplies that
appears on a balance sheet is determined by a physical count of the supplies on hand.)
Click here to download the spreadsheet to complete this activity.
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
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