Final answer:
Replenishing the petty cash fund involves debiting the expense accounts that were used and crediting the cash account. This process keeps the petty cash at its original level, preparing it for future transactions.
Step-by-step explanation:
Replenishing the petty cash fund requires a debit to various expense accounts and a credit to the cash account. The purpose of replenishing is to ensure that the petty cash fund is restored to its original amount, which supports ongoing small business transactions. The process involves identifying the various expenses paid through petty cash and recording those expenses in the company's ledger.
For example, if the petty cash fund had been used to pay for office supplies worth $50, snacks for the office costing $30, and postage amounting to $20, you would need to:
- Debit the office supplies expense account for $50.
- Debit the snack expense account for $30.
- Debit the postage expense account for $20.
Then you would credit the cash account for the total amount spent, which in this case is $100. This returns the petty cash fund back to its original level, assuming the fund is established at $100.