Question

CHAPTER 7 Internal Control and Cash Problem 7-3A Petty cash fund reimbursement and analysis of errors L04 Capital Irrigation has only a general journal in its accounting system and uses it to record all trans. actions. However, the company recently set up a petty cash fund to facilitate payments of small items. The following petty cash transactions were noted by the petty cashier as occurring during April 2017: Apr. 1 Received a company cheque for $300 to establish the petty cash fund. 15 Received a company cheque to replenish the fund for the following expenditures made since April 1 and to increase the fund to $400. a. Paid $82 for janitorial service. b. Purchased office supplies for $78.15. c. Purchased postage stamps for $25.00. d. Paid $92.50 to The County Crier for an advertisement in the newspaper. e. Discovered that $24.35 remained in the petty cash box. 30 The petty cashier noted that $244.95 remained in the fund and decided that the April 15 increase in the fund was too large. Therefore, a company cheque was issued to replenish the fund for the following expenditures made since April 15 and to reduce the fund to $350. f. Purchased office supplies for $94.65. 9. Reimbursed office manager for business auto, $45.60. h. Paid $14.80 courier charges to deliver merchandise to a customer. Required Prepare journal entries to record the establishment of the fund on April 1 and its replenish ments on April 15 and April 30. Analysis Component: Explain how the company's financial statements would be affected if the petty cash fund were not replenished and no entry were made on April 30. (Hint: The amount of office supplies that appears on a balance sheet is determined by a physical count of the supplies on hand.)

Answer 1