1. Prepare a general journal entry to record establishing the petty cash fund.2. Prepare a summary of petty cash payments. 3. Prepare the general journal entry to record the reimbursement and the decrease of the fund. Baby Photography completed the following petty cash transactions duringJuly 2020:Prepared a $500 cheque, cashed it, and turned theproceeds and the petty cash box over to Bob Stuart, theJuly5petty cashier.Paid $46 COD charges on merchandise purchased forresale. Baby Photography uses the perpetual inventory6.method to account for merchandise inventory.11Paid $26 delivery charges on merchandise sold to acustomer.12Purchased file folders, $7618Purchased paper for printer, $27.27Paid $31 COD charges on merchandise purchased forresale.28Purchased stamps, $6030Reimbursed Collin Dodge $134 for business car expenses.31Bob Stuart sorted the petty cash receipts by accountsaffected and exchanged them for a cheque to reimbursethe fund for expenditures. However, there was $88 in cashin the fund. In addition, the size of the petty cash fundwas decreased to $400.Page 525Required1. Prepare a general journal entry to record establishing the petty cashfund.2. Prepare a summary of petty cash payments similar toExhibit 7.3 that has these categories: delivery expense, autoexpense, postage expense, merchandise inventory, and office supplies.3. Prepare the general journal entry to record the reimbursement andthe decrease of the fund.

Journal entry is a primary entry that records the financial transactions initially.

Prepared a $500 cheque, cashed it, and turned the proceeds and the petty cash box over to Bob Stuart, the July petty cashier. Paid $46 COD charges on merchandise purchased for resale. Baby Photography uses the perpetual inventory method to account for merchandise inventory. 6. 11 Paid $26 delivery charges on merchandise sold to a customer. 12 Purchased file folders, $76 18 Purchased paper for printer, $27.

Prepared a $500 cheque, cashed it, and turned the proceeds and the petty cash box over to Bob Stuart, the July petty cashier. Paid $46 COD charges on merchandise purchased for resale. Baby Photography uses the perpetual inventory method to account for merchandise inventory. 6. 11 Paid $26 delivery charges on merchandise sold to a customer. 12 Purchased file folders, $76 18 Purchased paper for printer, $27.

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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Concept explainers

Cash Book

So, before coming to the topic of cash books, I will let you briefly explain about the cash so that you all can be familiar with the word cash. Cash comes under the category of the current asset which is used as a medium of exchange for all the financial transactions in the firm. Cash is something that is universally accepted as a mode of payment. So, now comes to the topic i.e., cash book.

Question

1. Prepare a general journal entry to record establishing the petty cash fund. 2. Prepare a summary of petty cash payments. 3. Prepare the general journal entry to record the reimbursement and the decrease of the fund.

Baby Photography completed the following petty cash transactions during
July 2020:
Prepared a $500 cheque, cashed it, and turned the
proceeds and the petty cash box over to Bob Stuart, the
July
5
petty cashier.
Paid $46 COD charges on merchandise purchased for
resale. Baby Photography uses the perpetual inventory
6.
method to account for merchandise inventory.
11
Paid $26 delivery charges on merchandise sold to a
customer.
12
Purchased file folders, $76
18
Purchased paper for printer, $27.
27
Paid $31 COD charges on merchandise purchased for
resale.
28
Purchased stamps, $60
30
Reimbursed Collin Dodge $134 for business car expenses.
31
Bob Stuart sorted the petty cash receipts by accounts
affected and exchanged them for a cheque to reimburse
the fund for expenditures. However, there was $88 in cash
in the fund. In addition, the size of the petty cash fund
was decreased to $400.
Page 525
Required
1. Prepare a general journal entry to record establishing the petty cash
fund.
2. Prepare a summary of petty cash payments similar to
Exhibit 7.3 that has these categories: delivery expense, auto
expense, postage expense, merchandise inventory, and office supplies.
3. Prepare the general journal entry to record the reimbursement and
the decrease of the fund.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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Review the following statements regarding a petty cash fund used in a business. Select the one that is correct. O A petty cash fund is controlled by top management. O The cashier of a fund will write checks for small payments like postage, supplies and deliveries, O Only the petty cashier is responsible for paying cash from the fund. OA check written against the fund is cashed when the fund is replenished.
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