Question

*E7.22B (L0 6)(Petty Cash) Velez, Inc. decided to establish a petty cash fund to help ensure internal control

over its small cash expenditures. The following information is available for the month of April:

1 On April 1, it established a petty cash fund in the amount of $1,000.

2 A summary of the petty cash expenditures made by the petty cash custodian as of April 10 is as follows.

Delivery charges paid on merchandise purchased $300.00

Supplies purchased and used 125.00

Postage expense 165.00

I.O.U. from employees 85.00

Miscellaneous expense 180.00

The petty cash fund was replenished on April 10. The balance in the fund was $135.

3 The petty cash fund balance was increased $1,000 to $1,500 on April 20.

Instructions

Prepare the journal entries to record transactions related to petty cash for the month of April.

Answer 1

SOLUTION

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
April 1	Petty cash	1,000
	Cash		1,000
April 10	Delivery charges	300
	Supplies expense	125
	Postage expense	165
	I.O.U from employees	85
	Miscellaneous expense	180
	Cash short and over	10
	Petty cash (1,000-135)		865
April 20	Petty cash	500
	Cash (1,500-1,000)		500