QUESTION 04 (7 marks)

Hay Traders established a $150 petty cash fund for small expenditures. Hay decided to replenish the account when the balance reach $80. The following transactions occurred in the first two weeks of the month of March 2020.

Date

Voucher No.

Description

Amount $

04/03

01

Entertainment expense

50

06/03

02

Stamp and envelop expenses

10

06/03

03

Cleaning liquids and other cleaning expense

15

07/03

04

Miscellaneous expense

5

10/03

05

Postage

10

12/03

06

Travelling expense

20

13/03

07

Freight out

30

Required:

1. Show the journal entries to establish the petty cash fund. (2 marks)

2. Show the journal entries to replenish the fund. (2 marks)

3. Show the journal entries assuming that a decision was made to increase the fund to $200. (2 marks)

4. Prepare the petty cash book for Hay Traders, with appropriate analysis columns to incorporate the transactions shown above. (8 marks)