Question

What is the purpose of a Petty Cash Fund? Provide an example journal entry that a...

What is the purpose of a Petty Cash Fund? Provide an example journal entry that a company might use to set up a Petty Cash Fund. Additionally, provide two example journal entries of payments from the Petty Cash Fund AND one example journal entry example to replenish the balance in the Fund.

Homework Answers

Answer #1
Petty cash;
petty cash is a small cash account maintained by the entity to make the payments of petty expenses in the day-to-day business activities.
The person take care this petty cash account is known as petty cash custodian.
Example journal entries
Account's tittle Debit $ Credit $
1. postal charges paid
Postage and Courier expense 100
Petty Cash 100
2. office stationary purchased,
Printing and stationary expenses 25
Petty Cash 25
Entry for replenishment of petty cash
Debit Petty cash a 500
Credit Cash 500
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