Quiz 1 Petty cash - Lecture notes 1 PDF

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Name: __________________________ Section:___________ Problem A Prada co established a petty cash fund to help ensure internal control over its small expenditures. The following are the transactions affecting the petty cash fund for the month of May 2020 1. On May 2, the company established petty cash fund of P8,000 2. The following were paid from May 2 to 20.  Freight merchandise purchases P 2,500  Freight on nerchandise sold 3,000  Supplies purchased 800  IOU’s from employees 1,200 3. On May 18 the employee paid their IOU’s granted on May 10 indicated above. Proceeds were returned to petty cash fund. 4. On May 20 the petty fund was replenished 5. Payments from petty cash fund from May 20 through May 31 are as follows  Freight on merchandise purchases P1,200  Transportation 150  Medicines for employees 320  IOU’s from employees 500 6. A count of fund on May 31 revealed bills and coins in the fund amounting to P5,700. Reporting date is May 31. Required: 1. Is there any shortage of the fund? 2. Prepare journal entries for the above transactions including adjustments on May 31. 3. Please indicate comments on the accounting procedure for petty cash and recommendations that you may suggest. Problem B In your cash count of the petty cash of Canon Co as of July 4, 2020 you found the following Bills and coins counted P 1,450.00 Approved and signed petty cash vouchers Dated June 2020 3,300 Dated July 1-4, 2020 800 IOU from Joe Santos, an employee 1,400 A check drawn by Juvy Victoria an employee dated July 15, 2020 2,000 An unsigned pay envelope payable to an employee on Leave, the envelope has been opened and there was No money inside. Indicated in the envelope is the Amount of 1,500 The petty cash fund has an imprest balance of P10,000. Reporting period is June 30, 2020 Required: a. Determine the amount of petty cash fund as of June 30, 2020 b. Determine the amount of shortage or overage for the petty cash fund. c. Prepare the necessary adjusting entries to bring the correct amount of petty cash as of reporting date. Use accounts receivable account as necessary...