Havermill Co. establishes a $250 petty cash fund on September 1. On September 30

Question

Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the reimbursement of the fund on September 30 includes a:

Debit to Office Supplies for $73.

Credit to Merchandise Inventory for $137.

Credit to Cash for $250.

Debit Petty Cash for $232.

Credit to Cash for $18.

Explanation / Answer

For reimbursement of the expenses, Petty cash account will be debited and Cash account will be credited by the amount of reimbursement.

Amount reimbursed= 73 +137+22+18

                                                =250

Hence entry would be:

Petty cash Debit              250

                Cash credit          250

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