Stihl Repairs completed the following petty cash transactions during July 2014:
July 5 Prepared a $500 cheque, cashed it, and turned the proceeds and the petty cash box over to Bob Stuart, the petty cashier.
6 Paid $108.00 COD charges on merchandise purchased for resale. Stihl Repairs uses the perpetual inventory method to account for merchandise inventory.
11 Paid $23.75 delivery charges on merchandise sold to a customer.
12 Purchased file folders, $8.50
14 Reimbursed Collin Dodge, the manager of the business, $8.26 for office supplies purchased.
18 Purchased paper for printer, $12.15
27 Paid $21.60 COD charges on merchandise purchased for resale.
28 Purchased stamps, $23.00
30 Reimbursed Collin Dodge $64.80 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 $233.94 in cash in the fund. In addition, the size of the petty cash fund was decreased to $300.
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 8.2 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 increase of the fund.
Analysis Component: You supervise Bob Stuart, the petty cashier, and while reviewing the accounts you notice that the Cash Over/Short Expense account has a balance for the seven months ended July 31, 2014, of $300. Given the size of the petty cash account, does this balance appear to be unusual? Explain and identify any concerns that you might have.