Question

petty cash fund was established with a $380 balance. It currently has cash of $45 and petty cash tickets totaling $335. Which of the following would be included in the entry to replenish the fur A a debit to Petty Cash for 545 B. a credit to Cash for $45 OC a credit to Petty Cash for $335 OD. a debit to various expenses for $335 Click to select your answer

Answer 1

To replenish the petty cash fund, you need to debit various expenses for $335 and credit Cash for $335. Money in quarters, a checking account, and traveler's checks are part of M1, while funds in a money market account are part of M2. A bank's net worth can be calculated by subtracting its total liabilities from its total assets.

Step-by-step explanation:

Understanding Petty Cash Replenishment and Money Supply

The petty cash fund was established with a $380 balance. It currently has cash of $45 and petty cash tickets totaling $335. The correct entry to replenish the petty cash fund would be a debit to the various expenses for $335 and a credit to Cash for $335 to bring the fund back to its original balance. A line of credit does not count as part of the money supply until it's drawn upon, so it is not included in either M1 or M2.

Money supply categorization:

a. Your $5,000 line of credit on your Bank of America card - Neither

b. $50 dollars' worth of traveler's checks you have not used yet - M1

c. $1 in quarters in your pocket - M1

d. $1200 in your checking account - M1

e. $2000 you have in a money market account - M2

T-Account Balance Sheet for a Bank

For the bank with $400 in deposits, $50 in reserves, government bonds worth $70, and $500 in loans, the balance sheet would show Total Assets of $620 and Total Liabilities of $400. The bank's net worth, also known as equity, would be calculated by subtracting Total Liabilities from Total Assets, which in this case is $220.

Answer 2

A debit to various expenses for $335 is included in the entry to replenish the petty cash fund.

Step-by-step explanation:

The discrepancy between the beginning balance of $380 and the current cash of $45 suggests expenses incurred through petty cash tickets.

The missing amount is $380 - $45 = $335.

Petty cash tickets represent authorized expenses, so they should be recorded as debits to various expense accounts.

The replenishment deposit brings the fund back to its original level, so Cash receives a credit of $45.

Therefore, the correct entry is:

Debit: Various Expenses $335

Credit: Cash $45

Options A, B, and C are incorrect because:

A and B incorrectly credit Petty Cash, which would increase the fund instead of replenishing it.

C only credits Petty Cash for the remaining cash, ignoring the missing amount represented by the tickets.