When a petty cash fund is replenished, which of the following journal entries is correct?

• A. Debit Petty Cash and credit Cash
• B. Debit Petty Cash and credit various expense accounts
• C. Debit various expense accounts and credit Cash
• D. Debit Cash and credit Petty Cash

Answer: (C)

Verified step by step guidance

1. Understand the purpose of replenishing a petty cash fund: When petty cash is replenished, the goal is to account for the expenses incurred using the petty cash and restore the fund to its original balance.
2. Recognize that petty cash is not debited during replenishment: The petty cash account is only debited when the fund is initially established or increased. During replenishment, the expenses incurred are recorded instead.
3. Identify the correct accounts to debit: Expenses paid using petty cash are recorded by debiting the appropriate expense accounts (e.g., office supplies, travel expenses, etc.). This reflects the use of funds for specific purposes.
4. Determine the account to credit: The cash account is credited to show the reduction in the company's cash balance as funds are transferred to replenish the petty cash.
5. Prepare the journal entry: Debit the various expense accounts for the amounts spent and credit the cash account for the total amount replenished. This ensures proper accounting for the expenses and the cash outflow.