Question

Carolyn Keene, Inc. decided to establish a petty cash fund to help ensure internal control over its small cash expenditures. The following information is available for the month of April.

1. On April 1, it established a petty cash fund in the amount of $342.

2. A summary of the petty cash expenditures made by the petty cash custodian as of April 10 is as follows;
Delivery charges paid on merchandise purchased $72
Supplies purchased and used $37
Postage expense $52
I.O.U. from employees $29
Miscellaneous expense $48
The petty cash fund was replenished on April 10. The balance in the fund was $93.

3. The petty cash fund balance was increased by $112 to $454 on April 20.

Required:
Prepare the journal entries to record transactions related to petty cash for the month of April.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1. Petty cash A/c Dr $342

       To Cash A/c              $342

(Being petty cash fund established)

2. Freight - in expense A/c Dr $72

   Supplies expense A/c Dr $37

   Postage expense A/c Dr $52

   Loan to employees A/c Dr $29

   Miscellaneous expense A/c Dr $48

   Cash over and short A/c Dr $11  

                                            To Cash A/c Dr $249            ($342 - $93)  

(Being disbursement of cash recorded)

3. Petty Cash A/c Dr $112

          To Cash A/c          $112

(Being increase in petty cash recorded)