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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

PETTY CASH JOURNAL ENTRIES Based on the following petty cash information, prepare (a) the journal entry to establish a petty cash fund and (b) the journal entry to replenish the petty cash fund.

On January 1, 20--, a check was written in the amount of $300 to establish a petty cash fund. During January, the following vouchers were written for cash removed from the petty cash drawer:

images

To determine

Prepare journal entry to record (a) establishment a petty cash fund (b) to replenish the petty cash fund.

Explanation

Petty cash fund:

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

(a) Prepare journal entry to record establishment a petty cash fund.

DateAccount Titles and explanationPost. Ref.Debit ($)Credit ($)
January 1Petty cash 300 
      Cash  300
 (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 $300.
  • • Cash is an asset and there is a decrease in the value of an asset. Hence, credit the cash by $300.

(b) Prepare journal entry to record to replenish the petty cash fund.

DateAccount Titles and explanationPost. Ref.Debit ($)Credit ($)
January 31Phone expense  21.20 
 Automobile expense 39.60 
 Person J Drawings 85.00 
 Postage expense 15...

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