Petty cash fund: Petty cash fund is a fund established to pay insignificant amounts like postage, office supplies, and lunches. In day-to-day life, it becomes difficult to use checks for daily expenses. Therefore, companies maintain some minimum amount of funds in the hand for such daily expenses. These funds are called as petty cash funds. These funds are managed by custodian. This system is otherwise called as imprest system. To prepare: A journal entry to create the petty cash fund.

Question

Journalize the entries to record the following: Check is issued to establish a petty cash fund of $1,500. The amount of cash in the petty cash fund is now $540. Check is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $557; miscellaneous selling expense, $230; miscellaneous administrative expense, $144. (Because the amount of the check to replenish the fund plus the balance in the fund do not equal $1,500, record the discrepancy in the cash short and over account.) a. Journalize the entry to establish the petty cash fund. b. Journalize the entry to replenish the petty cash fund. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

Question

Chapter 8, Problem 8.24EX

(a)

To determine

Petty cash fund: Petty cash fund is a fund established to pay insignificant amounts like postage, office supplies, and lunches. In day-to-day life, it becomes difficult to use checks for daily expenses. Therefore, companies maintain some minimum amount of funds in the hand for such daily expenses. These funds are called as petty cash funds. These funds are managed by custodian. This system is otherwise called as imprest system.

To prepare: A journal entry to create the petty cash fund.

(b)

To determine

To prepare: Journal entry to record petty cash fund replenishment.

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