Valley Hardware (Mr. M. Jordan is the sole proprietor) established a petty cash fund on January 1, 2018.  A cheque for $400 payable to cash was given to Kate, the petty cashier, who went to the bank and brought back $400 and put it in the petty cash box.  The following transactions were completed during January. Jan 1     Purchased business cards for $36 (this business records office supplies as expenses upon purchase) Jan 10   Paid $60 for repairs to the office photocopier Jan 15   Paid $66 COD charges on merchandise to be resold to customers (the business uses the periodic inventory system) Jan 15   Purchased paper for the printer, $37 Jan 20   Paid $45 for an advertisement in the local January newspaper Jan 25   M. Jordan took $90 from the cash box to pay for a personal gift for his mother Jan 26   Paid $40 delivery charges on merchandise inventory sold to a customer Jan 28   Paid $16 for stamps used for mailing cheques to its suppliers. The money in the petty cash box was counted on January 31, and its total was $8.  The fund was replenished and increased by $100 on January 31. REQUIRED: ANSWER IN THE SOLUTION BOXES BELOW  A.  Prepare the journal entry to record the establishment of the petty cash fund    EXPLANATION IS REQUIRED   B.  Prepare a summary of petty cash payments (also known as the Petty Cash Payments Report) for January  Hint: This is not a complete list of general ledger accounts to use, but some of these may be useful to you:  (Office supplies expense, merchandise inventory or transportation - in (pick one), postage expense, delivery expense,  repairs expense)   C.  Prepare the journal entry to record the reimbursement of the petty cash fund, and to increase the size of the fund by $100.00

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Valley Hardware (Mr. M. Jordan is the sole proprietor) established a petty cash fund on January 1, 2018.  A cheque for $400 payable to cash was given to Kate, the petty cashier, who went to the bank and brought back $400 and put it in the petty cash box.  The following transactions were completed during January.

Jan 1     Purchased business cards for $36 (this business records office supplies as expenses upon purchase)

Jan 10   Paid $60 for repairs to the office photocopier

Jan 15   Paid $66 COD charges on merchandise to be resold to customers (the business uses the periodic inventory system)

Jan 15   Purchased paper for the printer, $37

Jan 20   Paid $45 for an advertisement in the local January newspaper

Jan 25   M. Jordan took $90 from the cash box to pay for a personal gift for his mother

Jan 26   Paid $40 delivery charges on merchandise inventory sold to a customer

Jan 28   Paid $16 for stamps used for mailing cheques to its suppliers.

The money in the petty cash box was counted on January 31, and its total was $8.  The fund was replenished and increased by $100 on January 31.

REQUIRED: ANSWER IN THE SOLUTION BOXES BELOW 

A.  Prepare the journal entry to record the establishment of the petty cash fund    EXPLANATION IS REQUIRED

 

B.  Prepare a summary of petty cash payments (also known as the Petty Cash Payments Report) for January 

Hint: This is not a complete list of general ledger accounts to use, but some of these may be useful to you:

 (Office supplies expense, merchandise inventory or transportation - in (pick one), postage expense, delivery expense,  repairs expense)

 

C.  Prepare the journal entry to record the reimbursement of the petty cash fund, and to increase the size of the fund by $100.00  

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