Question

Assume that the custodian of a $495 petty cash fund has $77.50 in coins and currency plus $409.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

A) Debit to Petty Cash for $495
B) Credit to Cash Over and Short for $4
C) Debit to Cash for $495
D) Credit to Petty Cash for $495

Answer 1

The entry to replenish the petty cash fund will include a debit to Petty Cash for $495 and a credit to Cash for $495.

Step-by-step explanation:

The entry to replenish the petty cash fund will include a debit to Petty Cash for $495 and a credit to Cash for $495.When replenishing the petty cash fund, the custodian is essentially reimbursing themselves for the expenses made from the fund. The debit to Petty Cash increases the balance of the fund, while the credit to Cash decreases the amount of cash on hand.In this scenario, the custodian has $77.50 in coins and currency plus $409.50 in receipts, totaling $487 in expenses made from the petty cash fund. Since the fund was initially set at $495, $495 - $487 = $8 is the amount that needs to be replenished. Therefore, the entry to replenish the petty cash fund will include a debit to Petty Cash for $495 and a credit to Cash for $495.