The petty cash fund has a current balance of $350, which is the established fund balance. Based on activity in the fund, it is determined that the balance needs to be changed to $400. Which journal entry is needed to make this change?

Question

Quizplus · Accepted Answer

Since the current balance is $350 and the desired balance is $400, the change needed is an increase of $50. To increase the balance of the petty cash fund, we need to debit the Petty Cash account and credit the Cash account for $50. Therefore, option C is the correct journal entry. Option A and D are incorrect because they debit the wrong account or credit the wrong account. Option B is incorrect because a journal entry is necessary to record this change in the financial records.

The Petty Cash Fund Has a Current Balance of $350