Question

On April 2, Granger Sales decides to establish a $290 petty cash fund to relieve the burden on Accounting.

Required:

a. Journalize the establishment of the fund

b. On April 10, the petty cash fund has receipts for mail and postage of $62, contributions, and donations of $33, meals and entertainment of $114, and $77 in the ending cash balance. Journalize the replenishment of the fund

c. On April 11, Granger Sales decides to increase petty cash to $430. Journalize this event

Answer 1

Answer and Explanation:

The journal entries are shown below:

On Apr 2

Petty cash $290

To Cash $290

(Being the establishment of the petty cash fund is recorded)

For recording this we debited petty cash as it increased the cash and credited the cash as it reduced the assets

On Apr 10

Mail & Postage $62

Contributions and Donations $33

Meals & entertainment $114

Cash Short and Over $4 ($290 - $62 - $33 - $114 - $77)

To Cash $213

(Being the replenishment of the fund is recorded)

For recording this, we debited the mail & postage, contributions & donations, meals & entertainment as it increased the expenses and credited the cash as it reduced the assets and the balancing figure is debited to cash short and over

On Apr 11

Petty Cash $140 ($430 - $290)

To Cash $75

For recording this we debited petty cash as it increased the cash and credited the cash as it reduced the assets