Concept explainers
Journalize the petty cash transactions.
Explanation of Solution
Petty cash fund: Petty cash fund is a fund established to pay insignificant amounts like postage, office supplies, and lunches. In day-to-day life, it becomes difficult to use checks for daily expenses. Therefore, companies maintain some minimum amount of funds in the hand for such daily expenses. These funds are called as petty cash funds. These funds are managed by custodian. This system is otherwise called as imprest system.
Date | Account Title and Explanation | Post Ref | Debit ($) | Credit ($) | |||
July | 1 | Petty Cash | 1,100 | ||||
Cash | 1,100 | ||||||
Open petty cash fund. |
Table (1)
Petty Cash is an asset and is increased by $1,100. Therefore, debit the Petty Cash account by $400. Cash is an asset and decreased by $1,100. Therefore, credit the Cash account by $1,100.
Journal entry 2: Record the cash sales.
Date | Account Title and Explanation | Post Ref | Debit ($) | Credit ($) | |||
July | 12 | Cash | 8,220 | ||||
Cash Short and Over | 28 | ||||||
Sales | 8,192 | ||||||
(To record the cash sales.) |
Table (2)
Cash is an asset and is increased due to cash sales. Thus, cash is debited with $8,220. Therefore, debit Cash account by $8,220. Sales as per cash records are $8,192. Thus, sales is credited with $8,192. The difference of $28 is credited with $28. Cash short and over is determined as follows:
Journal entry: Replenishment of funds.
Date | Account Title and Explanation | Post Ref | Debit ($) | Credit ($) | |||
July | 31 | Store Supplies | 580 | ||||
Delivery Expense | 225 | ||||||
Office Supplies | 140 | ||||||
Miscellaneous Administrative Expense | 88 | ||||||
Cash Short and Over | 20 | ||||||
Cash | 1,053 | ||||||
To record the replenishment of the petty cash fund. |
Table (3)
Store supplies and Office Supplies is an asset and it increases the value of asset. Therefore, debit store supplies and office supplies by $580 and $140 respectively. Delivery Expense is an expense and it decreases the value of equity. Therefore, debit Delivery Expense by $225. Miscellaneous administrative expenses is an expense and decreases the equity by $88. Thus, debit miscellaneous administrative expense with $88. Cash Short and over decreases the value of equity. The cash is short by $20. Therefore, debit Cash short and Over by $20. Cash is an asset and decreased by $1,053. Therefore, credit the cash account by $1,053.
Working note 1: Calculate the cash spent as below:
Working note2: Calculate the total payments.
Payments | Amount ($) |
Store Supplies | 580 |
Delivery Expense | 225 |
Office Supplies | 140 |
Miscellaneous Administrative Expense | 88 |
Total payments | 1,033 |
Table (4)
Working note3: Next, calculate cash short and over.
Determining of petty cash before replenishment involves two steps. First, calculate the total payments. Then determine the difference between imprest balance and total payments. This amount is petty cash fund before replenishment. Office supplies include amount spent for two boxes of stationery, and printer cartridges. Entertainment expense include office party and dinner expenses.
Journal entry 2: Record the cash sales.
Date | Account Title and Explanation | Post Ref | Debit ($) | Credit ($) | |||
July | 12 | Cash | 10,232 | ||||
Cash Short and Over | 9 | ||||||
Sales | 10,241 | ||||||
(To record the cash sales.) |
Table (5)
Cash is an asset and is increased due to cash sales. Thus, cash is debited with $10,232. Therefore, debit Cash account by $10,232. The difference of $9 and is debited. Sales as per cash records are $10,241. Thus, sales is credited with $10,241. Cash short and over is determined as follows:
Journal entry 1: Decrease in petty cash
Date | Account Title and Explanation | Post Ref | Debit ($) | Credit ($) | |||
July | 1 | Cash | 150 | ||||
Petty cash | 150 | ||||||
Open petty cash fund. |
Table (6)
Petty Cash is an asset and is increased by $1,100. Therefore, debit the Petty Cash account by $400. Cash is an asset and decreased by $1,100. Therefore, credit the Cash account by $1,100.
Want to see more full solutions like this?
Chapter 7 Solutions
Financial And Managerial Accounting
- Transactions related to revenue and cash receipts completed by Sycamore Inc. during the month of March 20Y8 are as follows: Prepare a single-column revenue journal and a cash receipts journal to record these transactions. Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. Place a check mark () in the Post. Ref. column to indicate when the accounts receivable subsidiary ledger should be posted.arrow_forwardOn July 2 Kellie Company has decided to initiate a petty cash fund in the amount of $1,200. Prepare journal entries for the following transactions: A. On July 5, the petty cash fund needed replenishment, and the following are the receipts: Auto Expense $125, Supplies $368, Postage Expense $325, Repairs and Maintenance Expense $99, Miscellaneous Expense $259. The cash on hand at this time was $38. B. On June 14, the petty cash fund needed replenishment, and the following are the receipts: Auto Expense $425, Supplies $95, Postage Expense $240, Repairs and Maintenance Expense $299, Miscellaneous Expense $77. The cash on hand at this time was $110. C. On June 23, the petty cash fund needed replenishment and the following are the receipts: Auto Expense $251, Supplies $188, Postage Expense $263, Repairs and Maintenance Expense $182, Miscellaneous Expense $203. The cash on hand at this time was $93. D. On June 29, the company determined that the petty cash fund needed to be decreased to $1,000. E. On June 30, the petty cash fund needed replenishment, as it was month end. The following are the receipts: Auto Expense $14, Supplies $75, Postage Expense $150, Repairs and Maintenance Expense $121, Miscellaneous Expense $39. The cash on hand at this time was $603.arrow_forwardOn May 2 Kellie Company has decided to initiate a petty cash fund in the amount of $1,200. Prepare journal entries for the following transactions: A. On July 5, the petty cash fund needed replenishment, and the following are the receipts: Auto Expense $125, Supplies $368, Postage Expense $325, Repairs and Maintenance Expense $99, Miscellaneous Expense $259. The cash on hand at this time was $38. B. On June 14, the petty cash fund needed replenishment, and the following are the receipts: Auto Expense $425, Supplies $95, Postage Expense $240, Repairs and Maintenance Expense $299, Miscellaneous Expense $77. The cash on hand at this time was $80. C. On June 23, the petty cash fund needed replenishment, and the following are the receipts: Auto Expense $251, Supplies $188, Postage Expense $263, Repairs and Maintenance Expense $182, Miscellaneous Expense $203. The cash on hand at this time was $93. D. On June 29, the company determined that the petty cash fund needed to be decreased to $1,000. E. On June 30, the petty cash fund needed replenishment as it was month-end. The following are the receipts: Auto Expense $114, Supplies $75, Postage Expense $50, Repairs and Maintenance Expense $121, Miscellaneous Expense $39. The cash on hand at this time was $603.arrow_forward
- On September 1, French company has decided to initiate a petty cash fund in the amount of $800. Prepare journal entries for the following transactions: A. On September 5, the petty cash fund needed replenishment, and the following are the receipts: Auto Expense $37, Supplies $124, Postage Expense $270, Repairs and Maintenance Expense $168, Miscellaneous Expense $149. The cash on hand at this time was $48. B. On September 14, the petty cash fund needed replenishment and the following are the receipts: Auto Expense $18, Supplies $175, Postage Expense $50, Repairs and Maintenance Expense $269, Miscellaneous Expense $59. The cash on hand at this time was $210. C. On September 23, the petty cash fund needed replenishment and the following are the receipts: Auto Expense $251, Supplies $88, Postage Expense $63, Repairs and Maintenance Expense $182, Miscellaneous Expense $203. The cash on hand at this time was $20. D. On September 29, the company determined that the petty cash fund needed to be increased to $1,000. E. On September 30, the petty cash fund needed replenishment as it was month end. The following are the receipts: Auto Expense $18, Supplies $15, Postage Expense $57, Repairs and Maintenance Expense $49, Miscellaneous Expense $29. The cash on hand at this time was $837.arrow_forwardThe transactions completed by Revere Courier Company during December, the first month of the fiscal year, were as follows: Instructions 1. Enter the following account balances in the general ledger as of December 1: 2. Journalize the transactions for December, using the following journals similar to those illustrated in this chapter: cash receipts journal (p. 31), purchases journal (p. 37, with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), single-column revenue journal (p. 35), cash payments journal (p. 34), and two-column general journal (p. 1). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made. 3. Post the appropriate individual entries to the general ledger. 4. Total each of the columns of the special journals and post the appropriate totals to the general ledger; insert the account balances. 5. Prepare a trial balance.arrow_forwardTransactions related to purchases and cash payments completed by Wisk Away Cleaning Services Inc. during the month of May 20Y5 are as follows: Prepare a purchases journal and a cash payments journal to record these transactions. The forms of the journals are similar to those illustrated in the text. Place a check mark () in the Post. Ref. column to indicate when the accounts payable subsidiary ledger should be posted. Wisk Away Cleaning Services Inc. uses the following accounts:arrow_forward
- Prepare journal entries to record the following transactions. Create a T-account for Cash, post any entries that affect the account, and calculate the ending balance for the account. Assume a Cash beginning balance of $37,400. A. May 12, collected balance due from customers on account, $16,000 B. June 10, purchased supplies for cash, $4,444arrow_forwardHappy Tails Inc. has a September 1, 20Y4, accounts payable balance of 620, which consists of 320 due Labradore Inc. and 300 due Meow Mart Inc. Transactions related to purchases and cash payments completed by Happy Tails Inc. during the month of September 20Y4 are as follows: a. Prepare a purchases journal and a cash payments journal to record these transactions. The forms of the journals are similar to those used in the text. Place a check mark () in the Post. Ref. column to indicate when the accounts payable subsidiary ledger should be posted. Happy Tails Inc. uses the following accounts: b. Prepare a listing of accounts payable creditor balances on September 30, 20Y4. Verify that the total of the accounts payable creditor balances equals the balance of the accounts payable controlling account on September 30, 20Y4. c. Why does Happy Tails Inc. use a subsidiary ledger for accounts payable?arrow_forward
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengageFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,