Final answer:
Entries to the petty cash account are made when establishing the fund to record the initial amount, replenishing the fund to account for expenses, and recording shortages. Payments out of the fund are recorded at replenishment time, not at the time of payment. Option B is correct.
Step-by-step explanation:
Entries to the petty cash account are made for several reasons. When establishing the fund, an initial entry is made to record the amount of cash that is being put into the petty cash fund. This is recorded as a debit to the petty cash account and a credit to the main cash account.
When replenishing the petty cash fund, entries are made to account for the expenses paid out of the petty cash. This involves debiting various expense accounts and crediting the main cash account, while also accounting for any discrepancies such as shortages or overages.
If there are any shortages in the fund, these are recorded as an expense. Finally, when making payments out of the fund, it is usual just to reduce the cash in the petty cash box without making any immediate accounting entries; however, these payments will be recorded once the fund is replenished.