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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
(Appendix 6.1) On June 1, Snow Company established a petty cash fund of $1,000 to pay for various office supplies. A count at the end of the month shows $325 remaining in the fand, while the vouchers indicate that $650 of costs were incurred. Prepare the journal entries to establish the petty cash fund on June 1 and replenish the fund on June 30.
Record journal entries to establish the petty cash fund during June 1 and replenish the fund on June 30.
Journal:
Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
-  Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
-  Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
Prepare journal entries:
| Date | Account Titles and Explanation | Debit ($) | Credit($) |
| Â | Â | Â | Â |
| June 1 | Petty Cash | 1,000 | Â |
| Â Â Â Â Cash | Â | 1,000 | |
| ( To record the establishment of fund) | Â | Â | |
| Â | Â | Â | Â |
| June 30 | Office supplies Expense | 650 | Â |
| Â | Cash Short and Over | 25 | Â |
| Â | Â Â Â Â Cash (1) | Â | 675 |
| Â | (To record the recognition of expenses) | Â | Â |
Table (1)
To record the establishment of fund:
- Petty cash is an asset account and it is increased...
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