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Petty cash fund Prepare journal entries for each of the following: a. Issued a check to establish a petty cash fund of $500. b. The amount of cash in the petty cash fund is $85. Issued a check to replenish the fund, based on the following summary of petty cash receipts: store supplies, $360, and miscellaneous selling expense, $40. Record any missing funds in the cash short and over account.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 7, Problem 4BE
Textbook Problem
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Petty cash fund

Prepare journal entries for each of the following:

  1. a. Issued a check to establish a petty cash fund of $500.
  2. b. The amount of cash in the petty cash fund is $85. Issued a check to replenish the fund, based on the following summary of petty cash receipts: store supplies, $360, and miscellaneous selling expense, $40. Record any missing funds in the cash short and over account.

To determine

Journalize the entries for each of the given transactions.

Explanation of Solution

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

a. Journalize the establishment of petty cash fund.

DateAccount TitlePost ref. Debit ($) Credit ($)
 Petty Cash $500 
 Cash  $500
 (To record the creation of petty cash fund)   

Table (1)

  • Petty cash is an asset. It is increased as petty cash account is created. Therefore, the petty cash account is debited with $500.
  • Cash is an asset. It is decreased as cash is paid for the creation of petty cash account. Therefore, the cash account is credited with $500.

b. Journalize the replenishment of petty cash fund.

DateAccount TitlePost ref...

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Chapter 7 Solutions

Financial And Managerial Accounting
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