Which entry correctly replenishes a petty cash fund after expenses have been paid?

• A. Debit the expenses; Credit Cash.
• B. Debit Cash; Credit Petty Cash.
• C. Debit the petty cash account; Credit Cash.
• D. Debit the expenses; Credit Petty Cash.

Answer: (C)

Restoring the petty cash fund to its fixed amount is done by moving cash from the main cash account into the petty cash fund, which increases the petty cash balance and decreases the general cash balance. So the proper journal entry is to debit the petty cash account (to raise its balance) and credit the Cash account (to reduce the overall cash on hand).

For example, if $60 was spent from petty cash, replenishing would be Debit Petty Cash $60 and Credit Cash $60. This brings the petty cash fund back to its established level. The expenses themselves were recorded earlier by debiting the respective expense accounts and crediting Petty Cash, so replenishment treats the transaction as restoring the fund rather than recording new expenses. The other approaches either debit expenses or move balances in the wrong direction, which would not accurately reflect replenishing the fund.