Reference no: EM13554742

Shelton Gallery had the following petty cash transactions in February of the current year.

Feb. 2 Wrote a $300 check, cashed it, and gave the proceeds and the petty cashbox to Bo Brown, the petty cashier.

5 Purchased bond paper for the copier for $10.13 that is immediately used.

9 Paid $22.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Shelton uses the perpetual system to account for merchandise inventory.

12 Paid $9.95 postage to express mail a contract to a client.

14 Reimbursed Alli Buck, the manager, $58 for business mileage on her car.

20 Purchased stationery for $77.76 that is immediately used.

23 Paid a courier $18 to deliver merchandise sold to a customer, terms FOB destination.

25 Paid $15.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.

27 Paid $64 for postage expenses.

28 The fund had $21.23 remaining in the petty cash box. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures.

28 The petty cash fund amount is increased by $100 to a total of $400.

Required

1. Prepare the journal entry to establish the petty cash fund.

2. Prepare a petty cash payments report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenditures in each category.

3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount.