On May 1, 2014, Vuitton Company established a petty cash fund by issuing a check for €500 to Antoinette Mercier, the custodian of the petty cash fund. On May 31, 2014, Mercier submitted the following paid petty cash vouchers for replenishment of the petty cash fund when there is €20 cash in the fund: The journal entry to establish the petty cash fund would include a

Question

On May 1, 2014, Vuitton Company established a petty cash fund by issuing a check for €500 to Antoinette Mercier, the custodian of the petty cash fund. On May 31, 2014, Mercier submitted the following paid petty cash vouchers for replenishment of the petty cash fund when there is €20 cash in the fund:  The journal entry to establish the petty cash fund would include a

Quizplus · Accepted Answer

When establishing a petty cash fund, a credit is made to the Cash account for the amount of the fund being established (in this case, €500). Therefore, choice C is the correct answer. The other choices are incorrect because a debit to Cash Over and Short (choice B) indicates that there has been a discrepancy between the actual cash balance and the amount of cash recorded on the books, and a credit to Accounts Payable (choice D) indicates that a liability has been incurred, neither of which is appropriate when establishing a petty cash fund.

On May 1, 2014, Vuitton Company Established a Petty Cash