Question

The petty cash fund has a current balance of $ 350​, which is the established fund balance. Based on activity in the​ fund, it is determined that the balance needs to be changed to $ 450. Which journal entry is needed to make this​ change?

Answer 1

Answer:

Debit the petty cash account and credit the cash account with $100

Explanation:

Businesses sets aside small amount of money(cash) to cover recurring expenses such as postage stamp, delivery charges, fares etc. This is usually done through the setting up of petty cash fund. The purpose of petty cash fund is to make provision for re-imbursement of minor expenses where there are no alternatives.

With regards to the above, the journal entries would be Debit petty cash account and Credit cash account with $100.

Answer 2

Answer:

Debit Petty Cash, credit cash for $100

Explanation:

To increase the petty cash fund, you must increase its normal balance which is a debit.

you are actually cashing a check for $100 (hence, credit to cash account) and actually putting more cash into your petty cash account.