Operation of the Petty Cash Fund

Operation of the Petty Cash Fund - 1, the entry in general...

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Operation of the Petty Cash Fund The operation of a petty cash fund involves (1) establishing the fund, (2) making payments from the fund, and (3) replenishing the fund. Establishing the Petty Cash Fund Two essential steps in establishing a petty cash fund are: (1) appointing a petty cash custodian who will be responsible for the fund, and (2) determining the size of the fund . Ordinarily, a company expects the amount in the fund to cover anticipated disbursements for a three- to four- week period. When the company establishes the petty cash fund, it issues a check payable to the petty cash custodian for the stipulated amount. If Laird Company decides to establish a $100 fund on March
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Unformatted text preview: 1, the entry in general journal form is: Petty Cash Cash (To establish a petty cash fund) Ethics Note Petty cash funds are authorized and legitimate. In contrast, slush funds are unauthorized and hidden (under the table). The fund custodian cashes the check and places the proceeds in a locked petty cash box or drawer. Most petty cash funds are established on a fixed-amount basis . Moreover, the company will make no additional entries to the Petty Cash account unless the stipulated amount of the fund is changed. For example, if Laird Company decides on July 1 to increase the size of the fund to $250, it would debit Petty Cash $150 and credit Cash $150....
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This note was uploaded on 11/06/2011 for the course ACCOUNTING ac 201 taught by Professor - during the Spring '11 term at Montgomery.

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Operation of the Petty Cash Fund - 1, the entry in general...

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