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Vaughn Company maintains a petty cash fund for small expenditures

Vaughn Company maintains a petty cash fund for small expenditures. These transactions occurred during the month of August.

Aug. 1

 

Established the petty cash fund by writing a check payable to the petty cash custodian for $210.

15

 

Replenished the petty cash fund by writing a check for $206.60. On this date, the fund consisted of $3.40 in cash and these petty cash receipts: freight-out $92.00, entertainment expense $46.20, postage expense $41.20, and miscellaneous expense $25.90.

16

 

Increased the amount of the petty cash fund to $310 by writing a check for $100.00.

31

 

Replenished the petty cash fund by writing a check for $294.40. On this date, the fund consisted of $15.60 in cash and these petty cash receipts: postage expense $142.00, entertainment expense $96.10, and freight-out $54.60.

Solutions

Expert Solution

 

 

Journalize the Pretty cash transactions :-

Date

Account Titles and Explanation

Debit

Credit

Aug. 1

Petty Cash 

$210

 

 

             Cash

 

$210

 

 

 

 

Aug. 15

Freight Out 

$92

 

 

Entertainment Expenses 

$46.20

 

 

Postage Expense 

$41.20

 

 

Miscellaneous expense 

$25.90

 

 

Cash Short & Over 

$1.3

 

 

                Cash 

 

$206.60

 

(For Explanation of cash and cash short see note 1)

 

 

 

 

 

 

Aug. 16

Petty Cash

$100

 

 

            Cash 

 

$100

 

 

 

 

Aug. 31

Postage Expense

$142

 

 

Entertainment Expense

$96.10

 

 

Freight out

$54.60

 

 

Cash Short & Over

$1.70

 

 

                         Cash 

 

$294.40

 

(For Explanation please see note -2)

 

  

 

Note 1 :-

Pretty Cash Fund = $210.00

Less - Fund Consists cash = $3.40

Cash Balance = $206.60

Now we find Cash short & over -

Cash Balance

$206.60

Less :-

 

Freight Out

$92

Entertainment Expenses

$46.20

Postage Expense

$41.20

Miscellaneous expense

$25.90

 

 

Cash Short & Over

$1.3

Note -2:

Note 2:-

Pretty Cash Fund = $310

Less - Fund Consists cash = $15.60

Cash Balance = $294.4

Now we find Cash short & over -

 

Cash Balance

$294.4

Less :-

 

Freight Out

$142

Entertainment Expenses

$96.10

Postage Expense

$54.60

 

 

Cash Short & Over

$1.7

Petty Cash is a type of cash available in the company to be used as payment for small amount of cash.

It is inconvenient to pay using a cheque for a small amount as the printing of cheques are very expensive, therefore, the company maintains a petty cash fund

Ramesh R answered 4 years ago
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