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, the journal entry would include a credit to Cash for the amount of the fund, which in this case is €500. Option A is incorrect because a debit to Cash would decrease the balance of the account, whereas the establishment of the petty cash fund increases the balance of Cash. Option B is incorrect because Cash Over and Short is used to record discrepancies between the actual and recorded amount of cash in the fund, and would not be used in the establishment of the fund. Option D is incorrect because Accounts Payable is not involved in the establishment of a petty cash fund.

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