A petty cash fund of $100 is replenished when the fund contains $5 in cash and receipts for $92. The entry to replenish the fund would
To properly understand how to replenish the petty cash fund, it is important to have a clear understanding of what a petty cash fund is. A petty cash fund is a small amount of cash that is kept on hand by businesses for small, day-to-day expenses that occur frequently, such as office supplies, postage, or employee reimbursement for small expenses.
In order to replenish the petty cash fund, you will need to follow a few steps:
1. Determine the total amount of money that should be in the petty cash fund: This is the original amount established for the fund. In this case, it is $100.
2. Count the cash remaining in the petty cash fund: This is the amount of money actually remaining in the fund. In this case, it is $5.
3. Calculate the total of all receipts for expenses paid from the petty cash fund: This is the total amount of money that was spent from the fund. In this case, it is $92.
4. Calculate the amount of money that needs to be replenished: Subtract the cash remaining in the petty cash fund from the total of all receipts. In this case, it is $92 - $5 = $87.
Now that you have determined that $87 needs to be replenished, you can proceed with the entry to replenish the fund. The entry would look like this:
Debit:
Expense Accounts (e.g., Office Supplies) - $87
Cash - $87
Credit:
Petty Cash - $87
This entry debits the expense accounts for the total amount of money that was spent from the petty cash fund ($87) and credits the petty cash account with the same amount ($87). By doing this, you are eliminating the expense from the expense accounts and replenishing the petty cash fund.