BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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debit Cash $200; credit Petty Cash $200
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debit Misc. Expense $200; credit Cash $200
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debit Petty Cash $200, credit Cash $200
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debit Petty Cash $200; credit Misc. Expense $200
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Detailed explanation-1: -Answer and Explanation: The entry establishing a $200 petty cash fund would include d) a debit to Petty Cash for $200. This entry is balanced by a credit to Cash for $200.
Detailed explanation-2: -The petty cash journal entry is a debit to the petty cash account and a credit to the cash account. The petty cash custodian refills the petty cash drawer or box, which should now contain the original amount of cash that was designated for the fund. The cashier creates a journal entry to record the petty cash receipts.
Detailed explanation-3: -In financial accounting, the petty cash account is a current asset. Therefore, the funds are entered as a normal debit balance.
Detailed explanation-4: -$300 is needed to replenish the Petty Cash back to the original balance. The journal entry to record the replenishing of Petty Cash would be: Debit to Office Supplies for $200 and Delivery Expense for $100. Then credit Cash for $300.