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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Cornerstone Exercise 4-24 Petty Cash with Change in Fund Balance

Basque Inc. maintains a petty cash fund with a balance of S800. On December 31, Basque’s petty cash account has a balance of $60. Basque replenishes the petty cash account, as it does at the end of every month, but also decides to increase the fund balance to $1,000. Basque classifies all petty cash transactions as miscellaneous expense.

Required:

What entry is made to record this activity?

To determine

Introduction:

Petty cash balance is the balance which is for the normal day to day small expense transaction. This is necessary for the business because all amount of the expense will be paid on the time of transaction.

To Indicate:

The entry is made to record.

Explanation

Petty cash fund is for the normal transaction which is base on the day to day activity.

As per this question opening balance of the petty cash fund is $800, and at the end balance only $60, but now petty cash fund balance will be $1,000. Then entry will be passed

    Date ParticularL.fDr ($)Cr ($)
    Miscellaneous expense a/c……...

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