Howard Corporation uses a petty cash system to pay for miscellaneous expenses. Howard established the petty cash fund with $600 on March 1. On March 31, the petty cash fund contained $12.98. The custodian of the fund saved the following vouchers for cash payments during March:
Required:a) Record the entry to establish the petty cash fund in general journal format.b) Assuming the company combines the entries to record the disbursements and to replenish the petty cash fund, record that entry in general journal format.
What will be an ideal response?
b) Since the amount of petty cash on hand is $12.98, it will take $587.02 to replenish the petty cash fund to its imprest balance of $600. Because the payments from the fund totaled $583.07 (or $242.73 + $129.00 + $51.80 + $167.44), there is a cash overage of $3.95.
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