Mattel, Inc., designs, manufactures, and markets toy products worldwide. Mattel’s toys include Barbie™ fashion dolls and accessories

Mattel, Inc., designs, manufactures, and markets toy products worldwide. Mattel’s toys include Barbie™ fashion dolls and accessories, Hot Wheels™, and Fisher-Price brands. For a recent year, Mattel reported the following net cash flows from operating activities (in thousands):



First quarter ending March 31 $ (41,844)
Second quarter ending June 30 (184,934)
Third quarter ending September 30 (55,548)
Fourth quarter ending December 31 955,600



Explain why Mattel reported negative net cash flows from operating activities during the first three quarters and a large positive cash flow for the fourth quarter, with overall net positive cash flow for the year.


Answer:
Toy manufacturers and retailers experience a seasonal trend in cash flows from operating activities. Mattel, Inc., experiences negative cash flows during the periods when merchandise is ordered for the holiday season. Mattel, Inc., generates positive cash flows during the holiday season, November–December. As a result, Mattel, Inc., reports overall positive net cash flows from operating activities for the year.




Journalize the entries to record the following:

a. Check No. 33694 is issued to establish a petty cash fund of $900.

b. The amount of cash in the petty cash fund is now $70. Check No. 33749 is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $525; miscellaneous selling expense, $190; miscellaneous administrative expense, $85. (Since the amount of the check to replenish the fund plus the balance in the fund do not equal $900, record the discrepancy in the cash short and over account.)


Answer:

a.
 Petty Cash 900
Cash 900

b.
 Office Supplies 525
Miscellaneous Selling Expense 190
Miscellaneous Administrative Expense 85
Cash Short and Over 30
Cash 830