The petty cash fund has a current balance of $250,which is the established fund balance.Based on activity in the fund,it is determined that the balance needs to be changed to $600.Which journal entry is needed to make this change?
A) Debit the Petty Cash account and credit the Cash account for $600.
B) No journal entry is needed because this change only involves cash.
C) Debit the Petty Cash account and credit the Cash account for $350.
D) Debit the Cash account and credit the Petty Cash account for $350.

Question

Quizplus · Accepted Answer

The journal entry needed to change the petty cash fund balance from $250 to $600 is to debit the Petty Cash account for the increase of $350 and credit the Cash account for the same amount. Option A is incorrect because it would increase the cash balance by $600, whereas the actual increase needed is only $350. Option B is incorrect because a journal entry is needed to record the change in balance. Option D is incorrect because it would decrease the cash balance, whereas the intention is to increase it.

The Petty Cash Fund Has a Current Balance of $250,which