A petty cash custodian maintains a $250 petty cash fund. At the end of each month, the custodian tallies the records of the petty cash transactions and presents them for reimbursement. Which of the following entries is necessary for recording the replenishment of the fund?

Question

A petty cash custodian maintains a $250 petty cash fund. At the end of each month, the custodian tallies the records of the petty cash transactions and presents them for reimbursement.  Which of the following entries is necessary for recording the replenishment of the fund?

Quizplus · Accepted Answer

When replenishing the petty cash fund, the expenses that were paid out of the fund need to be recorded in the appropriate expense accounts. The remaining amount of cash needed to bring the fund back to its original level is then reimbursed with cash. Therefore, the entry that records the replenishment should show the expenses and the reimbursement with cash. Option C records the expenses and the reimbursement correctly. Option A records only the reimbursement, while option B records the expenses but does not have the reimbursement entry. Option D records a Cash Over and Short account which is not necessary for this transaction.

A Petty Cash Custodian Maintains a $250 Petty Cash Fund