Havermill Co. establishes a $390 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $87 for Office Supplies, $165 for merchandise inventory, and $36 for miscellaneous expenses. The fund has a balance of $102. On October 1, the accountant determines that the fund should be increased by $78. The journal entry to record the establishment of the fund on September 1 is

Question

Kailyn Petty

Business

23 July, 09:14

Havermill Co. establishes a $390 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $87 for Office Supplies, $165 for merchandise inventory, and $36 for miscellaneous expenses. The fund has a balance of $102. On October 1, the accountant determines that the fund should be increased by $78. The journal entry to record the establishment of the fund on September 1 is

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Amos · Answer 1

petty cash 390 debit

cash 390 credit

Explanation:

We are asked for the establishment of the fund

we only need to create the petty cash account for the amount.

And decrease the cash account for the same amount, because is no logner available for other use.

When increasing the found we do thesame entry for the additional cash

If we need to remove the petty cash we will reverse this entry for the full amount

If we need to decrease the petty cashwe will reverse this entry forthe amount deducted