On January 1, the Needcash Company establishes an imprest petty cash fund by iss
ID: 2449025 • Letter: O
Question
On January 1, the Needcash Company establishes an imprest petty cash fund by issuing a check for $400. On January 31, the custodian of the petty cash fund submitted the following paid petty cash receipts for replenishment of the petty cash fund when there is $40 cash in the fund. Freight-Out $ 117 Gas & Oil 185 Postage 29 Owner's IOU for lunch 25 (the owner, Dan Donahue, never pays petty cash back) Required: Prepare the general journal entries to: A. Establish the fund on January 1. B. Replenish the fund on January 31. C. Increase the petty cash fund to $500 on February 1. General Journal
Explanation / Answer
At the start balance in petty cash was $400 and expense from petty cash were $117+$185+$29+$25 I.e. $356 therefore the balance in petty cash must be $400-$356 = $44 but actual balance is $40 so we can assume that remaining $4 is some other miscellaneous expense
Date Particulara Debit ($) Credit ($) Jan 1 Petty cash 400 Bank 400 (Being petty cash established through issue of cheque) Freight out 117 Gas & oil 185 Owners IOU for lunch 25 Postage 29 Miscellaneous expense 4 Petty cash 360 Jan 31 Petty cash 360 Bank 360 (Being replenishment of petty cash) Feb 1 Petty cash 100 Bank 100 (Being petty cash fund increased to $500)