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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Record entries in general journal form to record the following:

  1. a. Established a Petty Cash Fund, $100. Issued Ck. No. 587.
  2. b. Reimbursed the Petty Cash Fund for expenditures of $89: Store Supplies, $39; Office Supplies, $20; Miscellaneous Expense, $30. Issued Ck. No. 595.
  3. c. Increased the amount of the fund by an additional $75. Issued Ck. No. 597.
  4. d. Reimbursed the Petty Cash Fund for expenditures of $97.50: Store Supplies, $36.50; Delivery Expense, $41.00; Miscellaneous Expense, $20.00. Issued Ck. No. 599.

To determine

Journalize the petty cash fund transactions in the general journal.

Explanation

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

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Journalize the petty cash fund transactions in the general journal.

Transaction (a):

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
  Petty Cash Fund 100.00 
             Cash  100.00
  (Record creation of petty cash fund)   

Table (1)

Description:

  • Petty Cash Fund is an asset account. The asset is increased, and an increase in asset is debited.
  • Cash is an asset account. The amount has decreased because cash is transferred to Petty Cash Fund account. The asset is decreased, and a decrease in asset is credited.

Transaction (b):

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
  Store Supplies 39.00 
  Office Supplies 20.00 
  Miscellaneous Expense  30.00 
            Cash  89.00
  (Record reimbursement of petty cash fund)   

Table (2)

Description:

  • Store Supplies is an asset account. Since supplies are purchased, asset value increased, and an increase in asset is debited.
  • Office Supplies is an asset account. Since supplies are purchased, asset value increased, and an increase in asset is debited...

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