Kiona Co. set up a petty cash fund for payments of small amounts. The following

Question

Kiona Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company's fiscal year).

Required:
1. Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on May 16 and May 31. (Round your answers to 2 decimal places.)

May 1 Prepared a company check for $350 to establish the petty cash fund. 15 Prepared a company check to replenish the fund for the following expenditures made since May 1. a. Paid $109.20 for janitorial services. b. Paid $89.15 for miscellaneous expenses. c. Paid postage expenses of $60.90. d. Paid $80.01 to The County Gazette (the local newspaper) for an advertisement. e. Counted $26.84 remaining in the petty cashbox. 16 Prepared a company check for $200 to increase the fund to $550. 31 The petty cashier reports that $370.27 cash remains in the fund. A company check is drawn to replenish the fund for the following expenditures made since May 15. f. Paid postage expenses of $59.10. g. Reimbursed the office manager for business mileage, $47.05. h. Paid $48.58 to deliver merchandise to a customer, terms FOB destination. 31 The company decides that the May 16 increase in the fund was too large. It reduces the fund by $50, leaving a total of $500.

Explanation / Answer

1. Journal

Date Account Name Debit Credit May 1 Petty cash $350 Cash $350 May 15 Janitorial expense 109.20 Miscellaneous expense 89.15 Postage expense 60.90 Advertising expense 80.01 Over/Short 26.84 Cash 312.42 May 16 Petty cash 200 Cash 200 May 31 Postage expense 59.10 Mileage expense 47.05 Freight-out 48.58 Over/Short 25.00 Cash 179.73 May 31 Cash 50 Petty cash 50

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