Kali Corp. established a petty cash fund early in 2014 to increase the efficiency of accounting for small cash transactions and to improve control over many of the small expenditures it makes. The company decided to set up the impress fund at $200 and a cheque was issued for this amount and given to the petty cash custodian.
During January, the petty cash custodian made the following disbursements and placed a receipt for each in the cash box provided.
The petty cash was replenished on January 22 when the amount of cash in the fund was $36.40. In June, after six months' experience with the fund, management decided to increase the imp rest fund to $300.
(a) Prepare the journal entries to establish the petty cash fund, to reimburse it on January 22, and to increase the fund in June.
(b) Describe where the petty cash will be reported on Kali Corp.’s; financial statements.
(c) Explain briefly why many companies have a policy of reimbursing the petty cash fund on each balance sheet date.

  • CreatedSeptember 18, 2015
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