Answer:
(a) Debit Petty cash account for $150; and Credit Bank for $150.
(b) Debit Petty cash account for $122; and Credit Bank for $122.
The correct options are:
a. Fund amount is being reduced.
c. Fund is being eliminated.
Explanation:
(a) Prepare journal entries to record establishment of the fund.
The journal entry will look as follows:
<u>Details                                      Debit ($)          Credit ($)  </u>
Petty cash account                     150
Bank                                                                        150
<em><u>(To record petty cash fund establishment.)                     </u></em>
(b) Prepare journal entries to record reimbursement of the fund at the end of the current period.
Since the fund contained $28 at the end of the current period, we have:
Amount to reimburse = entertainment + postage + printing = $70 + $30 + $22 = $122
The journal entry will now look as follows:
<u>Details                                      Debit ($)          Credit ($)   </u>
Petty cash account                      122
Bank                                                                      122
<u><em>(To record petty cash fund reimbursement.)                      </em></u>
c. Identify the two events from the following that cause a Petty Cash account to be credited in a journal entry.
The correct options are:
a. Fund amount is being reduced.
c. Fund is being eliminated.
This is because they both in indicate outflows from the petty cash fund.