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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
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 October 1, 20--, a check was written in the amount of $200 to establish a petty cash fund. During October, the following vouchers were written for cash taken from the petty cash drawer:

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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 ($)Credit ($)
October 1Petty cash 200 
      Cash  200
 (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 $200.
  • • Cash is an asset and there is a decrease in the value of an asset. Hence, credit the cash by $200.

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

DateAccount Titles and explanationPost. Ref.Debit ($)Credit ($)
October 31Postage expense 13 
 Miscellaneous  expense 17 
 Person J, Drawings 45 
 

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