Journalize each of the following petty cash transactions:

Question

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a. Issued a check to establish a petty cash fund of $500. If an amount box does not require an entry, leave it blank.

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b. The amount of cash in the petty cash fund is $85. Issued a check to replenish the fund, based on the following summary of petty cash receipts: store supplies, $360, and miscellaneous selling expense, $40. Record any missing funds in the cash short and over account. If an amount box does not require an entry, leave it blank.

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Answer 1

To journalize the petty cash transactions provided, we will first record the establishment of the petty cash fund and then the replenishment of that fund based on the receipts provided.

a. Establishing the Petty Cash Fund

When establishing the petty cash fund, you will debit the Petty Cash account and credit the Cash account (or Bank account) for the amount of the fund.

Journal Entry:

| Date | Account | Debit | Credit | |------------|-------------------------|--------|---------| | [Date] | Petty Cash | 500 | | | | Cash | | 500 |

b. Replenishing the Petty Cash Fund

To replenish the petty cash fund, you need to calculate the total amount spent from the fund and compare it to the remaining cash to find any cash short or over. Here’s the breakdown:

• Total Petty Cash Receipts:

  • Store Supplies: $360
  • Miscellaneous Selling Expense: $40
  • Total Receipts: $360 + $40 = $400

• Amount in Petty Cash Fund Before Replenishment: $85

• Total Amount Available for Replenishment: $500 (established fund) - $85 (remaining cash) = $415

Now compare the amount to be replenished ($400) with the cash available for replenishment ($415). The difference indicates a cash over.

• Cash Over: $415 - $400 = $15

Now, you can record the journal entry for replenishing the petty cash fund.

Journal Entry:

| Date | Account | Debit | Credit | |------------|-----------------------------|--------|---------| | [Date] | Store Supplies | 360 | | | | Miscellaneous Selling Expense| 40 | | | | Cash Short and Over | 15 | | | | Cash | | 415 |

Summary of Entries

1. Establish Petty Cash Fund:

   • Debit Petty Cash: $500
   • Credit Cash: $500

2. Replenish Petty Cash Fund:

   • Debit Store Supplies: $360
   • Debit Miscellaneous Selling Expense: $40
   • Debit Cash Short and Over: $15
   • Credit Cash: $415

Make sure to adjust the [Date] field with the appropriate date for your transactions.