Recording Petty Cash Transactions Mallard Products had a balance of $350 in cash
ID: 2329300 • Letter: R
Question
Recording Petty Cash Transactions Mallard Products had a balance of $350 in cash in its petty cash fund at the beginning of November. The following transactions took place in November: a. On November 1, the custodian paid $72 out of petty cash for new pens with Mallard's newly designed logo prominently displayed. This is considered supplies expense. b. On November 7, the custodian paid $120 out of petty cash for minor repairs to its equipment. This is a maintenance expense. c. On November 9, the custodian paid $24 out of petty cash for transportation-in d. On November 15, the custodian paid $38 out of petty cash to have documents delivered to the accounting firm preparing the company's corporate tax return. This is considered an other expense. e. On November 22, the custodian paid $86 out of petty cash to reimburse the Chief Financial Officer for costs he had incurred in traveling to the airport for an important international business conference. This is a travel expense f. On November 28, the custodian submitted receipts for the above expenditures and a check was drawn for the amount to replenish the fund. Required: Prepare any journal entries made by the corporation to record these transactions. If no entry is required, select "No entry required" for all accounts and leave associated amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Nov. 1 Petty Cash x b. Nov. 7 Petty Cash x C. Nov. 9 Petty Cash d. Nov. 15 Petty Cash x e. Nov. 22 Petty Cash xExplanation / Answer
Journal Entries
Date
General Journal
Debit Credit
1-Nov
Supplies Expense
$ 350.00
Petty cash
$ 350.00
(Supplies Expense paid)
7-Nov
Maintenance Expense
$ 120.00
Petty cash
$ 120.00
(maintenance Expense paid)
9-Nov
Transport inwards
$ 24.00
Petty cash
$ 24.00
(Transportation expense recorded)
15-Nov
Other Expense
$ 38.00
Petty cash
$ 38.00
(Expense recorded)
22-Nov
Travel Expense
$ 350.00
Petty cash
$ 350.00
(Travelling Expense paid)
28-Nov
Petty cash
$ 882.00
Cash
$ 882.00
(Cash received from company for petty expenses)
Petty cash account is like a cash account. To do small and petty transactions it istime consuming for employees to get sanction of funds, that is why a petty cash account is created sot these expense and smooth working in any business organization.
When cash is paid out of Petty cash then Petty cash is Credited and Expense is Debited.
As we study in accounts , Debit what comes in and Credit what goes out. Over here Petty cash goes out hence it is credited. All expenses are debited.
On Nov 28 Petty cash expenses are reimbursed so that next cycle can be started, Generally companies maintain a particular balance in petty cash and when this balance is lower than prescribed amount a refill is done. Cash is received in amount of $882 which represent expenses made out of petty cash. On 28n nov, Petty cash is debited because cash is deposited into this account out of normal cash/bank balance.
Journal Entries
Date
General Journal
Debit Credit
1-Nov
Supplies Expense
$ 350.00
Petty cash
$ 350.00
(Supplies Expense paid)
7-Nov
Maintenance Expense
$ 120.00
Petty cash
$ 120.00
(maintenance Expense paid)
9-Nov
Transport inwards
$ 24.00
Petty cash
$ 24.00
(Transportation expense recorded)
15-Nov
Other Expense
$ 38.00
Petty cash
$ 38.00
(Expense recorded)
22-Nov
Travel Expense
$ 350.00
Petty cash
$ 350.00
(Travelling Expense paid)
28-Nov
Petty cash
$ 882.00
Cash
$ 882.00
(Cash received from company for petty expenses)
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