How to Properly Reimburse a Petty Cash Fund

What is the correct entry to reimburse a petty cash fund?

If the petty cash box fund is established at $400 and receipts total $275, and there is $120 cash in the drawer, what is the entry to reimburse the fund?

Answer:

The correct entry to reimburse the petty cash fund is to Debit Petty Cash $155 and Credit Cash $155.

When it comes to reimbursing a petty cash fund, it is important to make the correct entry to ensure accurate tracking of cash flow. In this scenario, where the petty cash box fund is established at $400 and receipts total $275, with $120 cash in the drawer, the entry to reimburse the fund would be to Debit Petty Cash $155 and Credit Cash $155.

This entry is necessary to maintain the proper balance between the petty cash fund and the cash in the drawer. By debiting the petty cash account and crediting the cash account, you are effectively transferring the amount used for expenses back into the petty cash fund. This helps in maintaining the accountability and integrity of the petty cash system.