Austin Co. established a petty cash fund by issuing a check for $300 and appointing Steve Mack
Question:
Austin Co. established a petty cash fund by issuing a check for $300 and appointing Steve Mack as petty cash custodian. Mack had vouchers for the following petty cash payments during the month:
Stamps ............$62
Miscellaneous items ....... 20
Employee supper money ....... 70
Taxi fare ............. 50
Window-washing service ...... 75
There was $21 of currency in the petty cash box at the time it was replenished.
Required
a. Prepare all general journal entries necessary to
(1) Establish the fund,
(2) Reimburse employees,
(3) Recognize expenses, and
(4) Replenish the fund.
b. Explain how the Cash Short and Over account required in this case will affect the income statement.
c. Identify the event depicted in each journal entry recorded in Requirement a as asset source
(AS), asset use (AU), asset exchange (AE), or claims exchange (CE).
d. Record the effects of the events in Requirement a on the financial statements using a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an account was not affected by the event.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds