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11 September, 00:06

On April 2, Granger Sales decides to establish a $360 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 $34, contributions and donations of $19, meals and entertainment of $112, and $191 in the ending cash balance. Journalize the replenishment of the fund.

(c) On April 11, Granger Sales decides to increase petty cash to $470. Journalize this event.

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  1. 11 September, 02:58
    0
    a) Debit = Petty Cash $360; Credit = Cash = $360

    b) Debit Mail and Postages=$34,

    Contributions and donations = $19,

    Meals and Entertainment = $112,

    Cash Over and Shorts=$4

    Credit Cash = $169

    C) Debit = Petty Cash $110; Credit = Cash $110

    Explanation:

    a) Journalise the establishment of the fund

    April 2 Debit Petty Cash $360

    Credit Cash A/C $360

    Being the establishment of a petty cash fund

    b) Petty Cash Expenditure and Replenishment

    April 10 Debit Mail and Postage $34

    Debit Contributions and donations $19

    Debit Meals and Entertainment $112

    Debit Cash Over and Shorts $4

    Credit Cash A/c $169

    Being the replenishment of Petty Cash fund

    Note: The balance of $191 in the ending cash balance means the petty cash already expended $169. However, the addition of Mail, Contributions and Meals = $165, meaning the account is short by $4 and this must be debited as Cash shorts to make up the difference.

    c) Increase in Petty Cash to $470

    April 11 Debit Petty Cash $110

    Credit Cash A/c $110

    Being the Increase in Petty Cash account by $110 (from $360 to $470)
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