Sandhill, Inc. decided to establish a petty cash fund to help ensure internal control over its small cash expenditures. The following information is available for the month of April.
1. On April 1, it established a petty cash fund in the amount of $232.
2. A summary of the petty cash expenditures made by the petty cash custodian as of April 10 is as follows. Delivery charges paid on merchandise purchased $70 Supplies purchased and used 35 Postage expense 43 I. O.U. from employees 27 Miscellaneous expense 46 The petty cash fund was replenished on April 10. The balance in the fund was $2.
3. The petty cash fund balance was increased $110 to $342 on April 20. Prepare the journal entries to record transactions related to petty cash for the month of April.

petty cash fund   232 debit

              cash            232 credit

--to record establishment of the fund--

merchandise inventory 70 debit

postage expenses         43 debit

prepaid wages               27 debit

miscellaneous expense 46 debit

         cash                             186 credit

--To record the replenishment of the petty fund--

Explanation:

The first will be the stablishment we credit cash and create the fund

Second we will debit all the uses of the petty fund and credit cash. the petty fund is ontly used when decrease it or increase it.

we debit merchandise invnetory as inventory is the sum of all incurred cost to get the inventory

the wages paid in advance will be prepaid wages

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