Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated recei
pts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the increase in the fund balance on October 1 is:
1 answer:
The journal entry to record the increase in the fund balance on October 1 has been recorded by debiting the petty cash and crediting the cash with $50.
Further explanation:
Petty cash fund: It refers to the fund established for paying the small amount of expenditures which are incurred on a daily basis. The petty cash fund is suitable for small payments where the check is not useful.
Journal entry: The journal entry is the mode of recording the transactions of the business in the general journal. The transactions are recorded as per debit and credit balances. The transactions are recorded according to date and time.
The journal entry to record the increase in the fund balance on October 1:
Date Accounts Title and Explanation Post Ref. Debit ($) Credit ($)
1-Oct Petty Cash 50
Cash 50
(to record the increase in fund balance on October 1)
The balance of petty cash is debited as it is an asset. The cash has been credited as it has been transferred to the petty cash fund. Thus, the journal entry has been passed by debiting petty cash and crediting cash with $50.
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Answer details
Grade: Middle School
Subject: Fundamental Accounting
Chapter: Journal entries
Keywords: Havermill Co., $250 petty cash fund, miscellaneous expenses, $250 petty cash fund, the fund has a balance of, on September 30, the fund is replenished, $137 for merchandise inventory, the journal entry to record, accumulated receipts, office supplies, accountant determines that fund has a balance of $18, fund should be increased by $50, October 1, date represents.
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