Question

question 2 (10 points)

a company set-up a petty cash fund with $800. the disbursements are as follows:

office supplies: $300
shipping: 50
postage: 30
delivery expense: $350

answer the question below based on the above information.

to create the fund, which account should be credited?

• supplies
• cash at bank
• petty cash
• postage

Explanation:

Identify the transaction type

The question asks for the account to be credited when creating (establishing) a petty cash fund.

Determine the journal entry

To establish a petty cash fund, the Petty Cash asset account is increased (debited) and the regular Cash (or Cash at Bank) asset account is decreased (credited).

$$ \text{Debit: Petty Cash } \$800 $$

$$ \text{Credit: Cash at Bank } \$800 $$

Match with options

The account that should be credited is "Cash at Bank".

Answer:

• Supplies
• Cash at Bank (Correct answer)
• Petty Cash
• Postage