Carolyn Keene, Inc. decided to establish a petty cash fund to help ensure intern

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 $341.
2. A summary of the petty cash expenditures made by the petty cash custodian as of April 10 is as follows.

The petty cash fund was replenished on April 10. The balance in the fund was $98.

3. The petty cash fund balance was increased by $111 to $452 on April 20.

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

Delivery charges paid on merchandise purchased $71 Supplies purchased and used 36 Postage expense 51 I.O.U. from employees 28 Miscellaneous expense 47

Explanation / Answer

April 1:
Petty Cash 200 (DR)
Regular Cash 200 (CR)
to set up fund

April 10:
Delivery expense 60 DR
Misc. expense 36 DR
Postage expense 33 DR
Supply expense 25 DR
Loan from Employee 17 DR
Petty Cash 171 CR
to record disbursements from petty cash fund

Misc Expense (or Cash Over/Under) 2 DR
Petty Cash 2 CR
to record petty cash over/under

April 10
Petty Cash 173 DR
Regular Cash 173 CR
to record replenishment of petty cash fund

April 30
Petty Cash 100 DR
Regular cash 100 CR
to record increase in amount of petty cash fund

DR=debit
CR=credit

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