Answer:
a) Petty Cash Dr.250
Cash Cr. 250
b) Entertainment Dr. 32
Postage Dr. 22
Printing Dr. 19
Petty Cash Cr. 73
So $ 73 will be reimbursed from Cash Account to Petty Cash
Petty Cash Dr.73
Cash Cr.73
Explanation:
All the expenses can never be paid through bank account or cheque. So companies establish petty cash fund to meet routine expenses.
a)In our example above, petty cash is an asset so any increase will be debited and cash is also asset. Therefore decrease in it will be credited
B) All expenses from petty cash will be debited because increase in expense is debited. Therefore decrease in cash is credited.
Answer:
a) journal entry to record setting up of petty cash fund
Petty cash Fund Debit $ 250
Cash Credit $ 250
b) journal entry to record reimbursement of the fund
Petty cash Fund Debit $ 177
Cash Credit $ 177
Explanation:
The initial journal entry to record the setting up of the fund is by a debit to the petty cash fund and crediting cash. A bank account can also be used if a cheque withdrawal is amd to set up the fund. The initial set up amount is the amount of the journal entry
The reimbursement/ replenishment of the fund is with the amount that has been consumed for petty cash payments.
The actual recording of expenses is made with a separate journal entry debiting relevant expense accounts and crediting petty cash fund
