Blues Music Center had the following petty cash transactions in March of the current year. Blues uses the perpetual system to account for merchandise inventory.

Required
1. Prepare the journal entry to establish the petty cash fund.
2. Prepare a petty cash payments report for March with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense.

3. Prepare the journal entries for part 2 to both (a) Reimburse  (b) Increase the fund amount.

Transcribed Image Text:

Mar. 5 6 11 Wrote a $250 check to establish a petty cash fund. Paid $12.50 shipping charges (transportation-in) on merchandise purchased for resale, terms FOB shipping point. These costs are added to merchandise inventory. Paid $10.75 in delivery expense on merchandise sold to a customer, terms FOB destination.