Nakashima Gallery had the following petty cash transactions in February of the current year. Nakashima uses the perpetual system to account for merchandise inventory.
Feb. 2 Wrote a $400 check to establish a petty cash fund.
5 Purchased paper for the copier for $14.15 that is immediately used.
9 Paid $32.50 shipping charges (transportation-in) on merchandise purchased for resale, terms
FOB shipping point. These costs are added to merchandise inventory.
12 Paid $7.95 postage to deliver a contract to a client.
14 Reimbursed Adina Sharon, the manager, $68 for mileage on her car.
20 Purchased office paper for $67.77 that is immediately used.
23 Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
25 Paid $13.10 shipping charges (transportation-in) on merchandise purchased for resale, terms
FOB shipping point. These costs are added to merchandise inventory.
27 Paid $54 for postage expenses. wiL47988

28 The fund had $120.42 remaining in the petty cashbox. 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 $500.

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.

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