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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Petty Cash Transactions (Appendix 6.1) Crown Company established a petty cash fund of $600 for incidental expenditures on January 2, 2019. At the end of the month, the count of cash on hand indicated that $57.35 remained in the fund. A sorting of petty cash vouchers disclosed that the following expenses had been incurred during the month, and the fund was replenished.

Chapter 6, Problem 20E, Petty Cash Transactions (Appendix 6.1) Crown Company established a petty cash fund of 600 for

Required:

Prepare the journal entries necessary to record Crown’s petty cash transactions during January.

To determine

Prepare journal entries to record the petty cash transactions.

Explanation

Petty cash fund:

Petty cash fund is a fund established to pay insignificant amounts like postage, office supplies, and lunches

Prepare journal entries to record the petty cash transactions.

DateAccount Titles and explanationDebit ($)Credit ($)
January 2Petty cash600 
      Cash 600
 (To establish the  petty cash fund)  

Table (1)

  • Petty cash is an asset and there is an increase in the value of an asset. Hence, debit the cash by $600.
  • Cash is an asset and there is a decrease in the value of an asset. Hence, credit the cash by $600.
DateAccount Titles and explanationDebit ($)Credit ($)
January 31Postage expense250.40 
 Office supplies expense165.90 
 Miscellaneous expense119.05 
 Cash short and over (2)7.30 
      Cash 542.65
 (To replenish petty cash fund )  

Table (2)

  • Postage expense is component of stockholder’s equity and there is an increase in the value of expense...

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