Joseph Kiuvik is reviewing the cash accounting for Connolly Corporation, a local mailing service. Joseph?s review will focus on the petty cash account and the bank reconciliation for the month ended May 31, 2020. Petty cash Joseph has collected the following information from Connolly?s bookkeeper:

1. The petty cash fund was established on May 10, 2020, in the amount of $400.

2. Expenditures from the fund as at May 31, 2020 were supported by approved receipts for the following:

Postage expense .................................................................................. $63.00Envelopes and other supplies .............................................................. 25.00In-house business lunch provided to customers ............................... 99.50Donation to local charity ....................................................................... 35.00Shipping charges, for goods to customers ......................................... 48.50Newspaper advertising ......................................................................... 22.80Taxi for sales manager to attend meeting downtown ...................... 18.75Freight paid on incoming purchases .................................................. 37.70

3. On May 31, 2020, the petty cash fund was replenished and increased to $500; currency and coin in the fund at that time totalled $47.10.

Connolly?s bookkeeper also provided the following summary bank statement and general ledger information:

Connolly?s general ledger Cash account had a balance of $9,300 on May 1. During the month, the company deposited $31,000 in the bank and wrote cheques in payment of accounts payable and the payroll for $31,685. Deposits in transit at the end of the month are determined to be $3,000, cash (from cash sales) still on hand with the company cashier is $246 (besides petty cash), and cheques outstanding at May 31 total $550. Connolly uses a periodic inventory system.

Instructions

a. Prepare the journal entries to record the transactions related to the petty cash fund for May. Connolly uses a periodic inventory system.

b. Prepare a bank reconciliation dated May 31, 2020, proceeding to a correct balance, and prepare the journal entries to make the books correct and complete.

c. What amount of cash should be reported in the May 31, 2020 SFP?

Transcribed Image Text:

Scotia Imperial Bank Bank Statement Disbursements Receipts Balance Balance, May 1, 2020 Deposits Note payment, received from customer plus interest of $30 Cheques cleared during May Bank service charges Balance, May 31, 2020 $9,019 $28,000 930 $31,100 37 6,812