Question

Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the reimbursement of the fund on September 30 includes a: Multiple Choice Credit to Cash for $250. Debit Petty Cash for $232. Credit to Merchandise Inventory for $137. Credit to Cash for $18. Debit to Office Supplies for $73.

Answer 1

Answer:

The correct answer is:

Debit to Office Supplies for $73.

Explanation:

Petty cash:

Petty cash or the petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check. There might be a petty cash drawer or box in each department for larger corporations.

When Petty Cash fund is reimbursed, the expenses incurred through Petty Cash are recorded by debiting those expense.

Hence, all expenses incurred, Office Supplies expense, Inventory, Miscellaneous expenses are to be debited.

This is why correct answer: Entry to record reimbursement of the fund on 30th Sept will include a DEBIT to Office Supplies for $73.