Accounting for Petty Cash Instructions: Prepare the necessary jourmal entries to
ID: 2569127 • Letter: A
Question
Accounting for Petty Cash Instructions: Prepare the necessary jourmal entries to record each of the following events a. November 3: Company Z establishes a $100 petty cash fund. Date Account Titles and Explanations Credits At the end of the month, the following receipts were in the cashbox: $7 for repairs to a broken window, $26 for payment of transportation in and $20 for payment of supplies that were completely used to clean the office. The petty cashier could not account for $5 missing in the cashbox. Prepare the journal entry to reimburse the fund b. Date Account Titles and Explanations Debits Credits At the end of the month, the petty cashier increased the fund balance to $150. Prepare the journal entry c. Date Account Titles and Explanations Debits CreditsExplanation / Answer
1) ACCOUNTING FOR PETTY CASH: a) Account Titles and Explanations Debit Credit Petty cash 100 Cash 100 (To record setting up of petty cash fund) b) Repairs expense 7 Transportation in 26 Office cleaning expenses 20 Cash short and over 5 Cash 58 (To record edpenses and replenish the petty cash fund) c) Petty cash 50 Cash 50 (To increase the petty cash fund to $150) 2) ACCOUNTING FOR BAD DEBTS: a) Allowance for uncollectible accounts 7100 Accounts receivable 7100 (To record write off of due from Company B) b) Accounts receivable 9000 Allowance for uncollectible accounts 9000 (To reinstate receivable written off earlier) Cash 9000 Accounts receivable 9000 (To record receipt of debt previously written off) c) Bad debts expense 1250 Allowance for uncollectible accounts 1250 Calculation for bad debts expense: Beginning balance 13900 Written off 7100 Reinstated 9000 Balance before adjusting entry 15800 Provision required 17050 Balance provision required = 17050-15800 = 1250 3) CALCULATION OF DEPRECIATION EXPENSE: a) Straight line method: Depreciation per year = (18900-9800)/7 = $1300 per year Depreciation expense 2017 = $1300*7/12 = $758 Depreciation expense 2018 = $1300 b) Units of production method: Rate of depreciation per unit = (18900-9800)/36400 = $0.25 per hour. Depreciation for 2017 = 9100*0.25 = $2,275 Depreciation for 2018 = 10920*0.25 = $2,730 c) Double declining balance method: Rate of depreciation = (100/7)*2 = 28.57% Depreciation for 2017 = 18900*28.57%*7/12 = $3150 Depreciation for 2018 = (18900-3150)*28.57% = $4500 4) BANK RECONCILIATION: Balance per bank 77658.70 Add: Deposit in transit 3032.00 3032.00 80690.70 Deduct Checks outstanding 4090.00 4090.00 Adjusted bank balance 76600.70 Balance as per books 72477.60 Add: Note receivable collected 4200.00 Interest income 105.00 4305.00 76782.60 Deduct: Bank charges 47.20 NSF check 134.70 181.90 Adjusted book balance 76600.70 JOURNAL ENTRY IN THE BOOKS: Cash 4123.10 Accounts receivable 134.70 Bank charges 47.20 Note receivable 4200.00 Interest income 105.00 (Compound entry to adjust balance as per books)