Question

You are the accountant for Cullumber Snow Removal Services. The company decided to establish a petty cash fund for small expenditures on November 1. Your responsibility is to oversee the fund, which includes collecting receipts, paying out the cash, and replenishing the fund. You completed the following transactions in November with regard to the petty cash fund:

I ONLY NEED HELP ON PT 2 THANKS

Problem 7-6A You are the accountant for Cullumber Snow Removal Services. The company decided to establish a petty cash fund for small expenditures on November 1. Your responsibility is to oversee the fund, which includes collecting receipts, paying out the cash, and replenishing the fund. You completed the following transactions in November with regard to the petty cash fund: Nov. 1 3 5 7 9 14 15 Cashed a cheque for $140 and put the cash in the petty cash box. Paid $3 for windshield fluid for the company trucks. Paid $24 for repairs to a tire on a company truck. Paid $46 to advertise in a community newsletter Gave the company owner, Roberta Hayes, $49 cash for personal expenses. Noted this on a piece of paper and put it in the petty cash box. Paid $7 for Office expenses. Determined that there was $17 cash and that the fund needed to be replenished. Removed the receipts from the petty cash box for the above expenditures and filed them as documentation for the reimbursement. Cashed the cheque and put the cash in the petty cash box. Paid $34 for repairs to the windshield of a company truck. Paid $5 for oil for a company truck. Paid $27 for supplies. Gave the company owner, Roberta Hayes, $36 cash for personal expenses. Noted this on a piece of paper and put it in the petty cash box. Paid $24 for Office expenses. Determined that there was $12 cash and that the fund needed to be replenished. Removed the receipts from the petty cash box for the above expenditures and filed them as documentation for the reimbursement. Cashed the cheque and put the cash in the petty cash box. 19 28 29 30 Note: Use Repairs Expense for any expenditures related to the company trucks.

Answer 1

Answer -2

Petty cash refers to small amounts of Currency made available to the cashier to make small payments instead of requesting Company check every time.

The amount of petty cash fund is recorded as current asset with name Petty Cash when the Petty cash fund is established. The Company replenish

Petty Cash fund either at the end of the accounting period or when it becomes low, whichever is earlier.The reason for replenishing the fund is that

no record of the fund expenditure will be recorded until the check is written and a journal entry is made. To determine which account is to debit,

the custodian of petty cash summarises the vouchers and determines the head of expenses

The journal entry to replenish the fund is to debit various expenses incurred and credit cash.

For eg.- let us assume petty cash fund of $100 has $10 in balance and summary of vouchers shows expenses incurred for Repairs is $ 40,

Advertising $20, drawings $20, and $10 for postage. Journal entry to replenish the fund will be

Account title

Debit

Credit

Repairs

$        40

Advertising

$        20

Drawings

$        20

Postage

$        10

Cash

$     90

(to replenish a petty cash fund)

Now we see that petty cash is not used ti replenish the fund.

Thus we can summarise that petty cash fund should be replenished whenever it becomes low because if it is not replenished then expenses will not be recorded

which will lead to untrue and unfair view of financial statement.