Cameron Co. established a $150 petty cash fund on January 1, 2017. One week later, on January 8, the fund contained $29.25 in cash and receipts for these expenditures: postage, $42.00; transportation-in, $27.00; store supplies, $32.75; and a withdrawal of $19.00 by Jim Cameron, the owner. Cameron uses the perpetual method to account for merchandise inventory.

a.Prepare the journal entry to establish the fund on January 1.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b.Prepare a summary of the petty cash payments and record the entry to reimburse the fund on January 8.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to 2 decimal places.)

Analysis Component:

If the January 8 entry to reimburse the fund were not recorded and financial statements were prepared for the month of January, would profit be over- or understated?

Understated