Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
7th Edition
ISBN: 9781260581256
Author: John Wild
Publisher: McGraw-Hill Education
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Chapter 6, Problem 2PSB
To determine

Petty cash system:

Petty cash system is a system which is used for making payments for small day to day expenses. It facilitates ease to deal with small cash disbursements.

Journal Entries:

Journal entries are the transactions of quantitative nature that are made in the books of accounts to record every transaction that happens in the business in the chronological order.

Accounting rules for journal entries:

  • To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
  • To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

1.

To prepare: Journal entries in the books of M Company during the month of January.

2.

To determine

To explain: Affect on financial statements of not replenished petty cash fund and lack of journal entry on January 31.

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