Wilkinson Company established a $100 petty cash fund on August 1. On August 31, the fund had $7 cash remaining and petty cash receipts for postage $31, office supplies $42, and miscellaneous expense $16. Prepare journal entries to establish the fund on August 1 and replenish the fund on August 31.

Answer and Explanation:

The Journal entry is shown below:-

August 1

Petty Cash Dr, $100

To Cash $100

(Being establishment of petty cash fund is recorded)

August 31

Postage expenses Dr, $31

Office supplies Dr, $42

Miscellaneous expenses Dr, $16

Cash short and over $4

($100 - $31 - $42 - $16 - $15)

To Cash $93

(Being petty cash fund replenished is recorded)

Petty Cash Dr, $93

($100 - $7)

To Cash $93

(To record reimburse the fund)