Cameron Co. established a $200 petty cash fund on January 1, 2023. One week later, on January 8, the fund contained $46.85 in cash and receipts for these expenditures: postage, $51.60; transportation-in, $35.00; store supplies, $41.55; and a withdrawal of $25.00 by Jim Cameron, the owner. Cameron uses the perpetual method to account for merchandise inventory.
1. Prepare the journal entry to establish the fund on January 1.
2. Prepare a summary of the petty cash payments similar to Exhibit 7.3 and record the entry to reimburse the fund on January 8.

Analysis Component:
If the January 8 entry to reimburse the fund were not recorded and financial statements were prepared for the month of January, would profit be over- or understated?

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Table Summary: Summary DEMANO Petty Cash Payments Report November 2023 Receipts: Office maintenance Nov. 2 Washing windows........ 17 Washing windows... 27 Computer repairs........ Transportation-in Nov. 5 Delivery of merchandise purchased... 20 Delivery of merchandise purchased.. Delivery expense Nov. 28 Customer's package delivered.. Office supplies Nov. 15 Purchased office supplies..... Total receipts............ Fund total...... Less: Cash remaining.............. Equals: Cash required to replenish petty cash.. Cash over/(short) $10.00 10.00 26.50 $46.50 $ 6.75 8.30 15.05 5.00 4.75 $75.00 2.20 $71.30 $72.80 ($ 1.50)