Question

Childers Company, which uses a perpetual inventory system, has an established petty cash fund in the amount of $400. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts:

December 4 Freight charge for merchandise purchased $ 62
December 7 Delivery charge for shipping to customer $ 46
December 12 Purchase of office supplies $ 30
December 18 Donation to charitable organization $ 51

If, in addition to these receipts, the petty cash fund contains $201 of cash, the journal entry to reimburse the fund on December 31 will include:

A. A debit to Transportation-In of $62.
B. A credit to Cash of $199.
C. A debit to Petty Cash of $189.
D. A credit to Cash Over and Short of $10.
E. A credit to Office Supplies of $30.

Answer 1

Answer: C. A debit to Petty Cash of $189.

Explanation: from the above question, the total amount given out of the petty cash is $189. That is why we are reimbursing the petty cash with $189.

In Accounting, the receiving account is debited while the giving account is credited. That is why we will reimburse the petty cash account by Debiting the petty cash account with $189 and crediting the bank with $189.