Exercise 6-10 Petty cash fund accounting LO P2

Palmona Co. establishes a $270 petty cash fund on January 1. On January 8, the fund shows $173 in cash along with receipts for the following expenditures: postage, $42; transportation-in, $11; delivery expenses, $13; and miscellaneous expenses, $31. Palmona uses the perpetual system in accounting for merchandise inventory. Prepare journal entries to (1) establish the fund on January 1, (2) reimburse it on January 8, and (3) both reimburse the fund and increase it to $320 on January 8, assuming no entry in part 2. Hint: Make two separate entries for part 3.

Answer is complete but not entirely correct. No Date General Journal Debit Credit 1 Jan 01 270 Petty cash Cash 270 2 Jan 08 42 11 Postage expense Merchandise inventory Delivery expense Miscellaneous expenses Cash 13 OOOO 31 97 3 Jan 08 42 11 13 Postage expense Merchandise inventory Delivery expense Miscellaneous expenses Cash Petty cash Cash 31 97 147 147 X 4 Jan 08 147 Petty cash Cash 147 X