Maxine Co. establishes a Petty Cash Fund of $250. The journal entry recorded would include a

Question

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When a petty cash fund is established, the journal entry recorded includes a debit to Petty Cash Fund since it is an asset account. The cash used to establish the fund should already be on hand in the company's regular checking account, so no additional cash is needed. Therefore, there is no debit to Cash or Supplies Expense, and the answer is not D.

Maxine Co Establishes a Petty Cash Fund of $250