On February 1, Fixit Car Repair decided to establish a petty cash fund. The company wanted to use this money for small expenses which may arise when repairing cars. With $25,000 in its cash account, the company decided to write a check for $450 to establish a petty cash fund. Throughout the week, the business used $50 to buy new oil cans, $42 to buy antifreeze and $110 to buy mini tire pressure gauges. On February 8, the company decided to write a check to replenish the petty cash fund. Post the journal entry for setting up the petty cash fund. Post the journal entry to replenish the petty cash fund. Remember to account for the purchases for the week. Post the transactions to the general ledger.
Petty Cash Fund Setup Journal Entry:
Date: February 1
Account Debit Credit
Petty Cash Fund $450
Cash $450
(To record the establishment of the petty cash fund)
Petty Cash Fund Replenishment Journal Entry:
Date: February 8
Account Debit Credit
Petty Cash Fund $202
Expense - Oil Cans $50
Expense - Antifreeze $42
Expense - Mini Tire Pressure Gauges $110
Cash $202
(To replenish the petty cash fund and record the expenses for the week)
General Ledger:
Date Account Debit Credit
February 1 Petty Cash Fund $450
Cash $450
February 8 Petty Cash Fund $202
Expense - Oil Cans $50
Expense - Antifreeze $42
Expense - Mini Tire Pressure Gauges $110
Cash $202