RPM Music Center had the following petty cash transactions in March of the current year:

RPM Music Center had the following petty cash transactions in March of the current year:

 

March 5   Wrote a $200 check, cashed it, and gave the proceeds and the petty cashbox to Liz Buck, the petty cashier.

          6    Paid $14.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. RPM uses the perpetual system to account for merchandise inventory.

        11    Paid $8.75 delivery charges on merchandise sold to a customer, terms FOB destination.

        12    Purchased file folders for $12.13 that are immediately used.

        14    Reimbursed Will Nelson, the manager, $9.65 for office supplies purchased and used.

        18    Purchased printer paper for $22.54 that is immediately used.

        27    Paid $47.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.

        28    Paid postage expenses of $16.

        30   Reimbursed Nelson $58.80 for business car mileage.

        31 Cash of $11.53 remained in the fund. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures. The fund amount is also increased to $250.

 

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. Sort the payments into the appropriate categories and total the expenses in each category.

 

3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount.