Question

Waupaca Company establishes a $440 petty cash fund on September 9. On September 30, the fund shows $193 in cash along with receipts for the following expenditures: transportation-in, $46; postage expenses, $78; and miscellaneous expenses, $111. The petty cashier could not account for a $12 shortage in the fund. The company uses the perpetual system in accounting for merchandise inventory. Prepare (1) the September 9 entry to establish the fund, (2) the September 30 entry to reimburse the fund, and (3) an October 1 entry to increase the fund to $490

Answer 1

petty cash fund 440 debit

cash 440 credit

--stablishment of the fund--

freight-in 46 debit

postage expenses 78 debit

miscellaneous expenses 111 debit

cash shortage loss 12 debit

Cash 247 credit

--reimbursement of the fund--

petty cash fund 50 debit

Cash 50 credit

--incerase of the fund to 490--

Step-by-step explanation:

The petty fund will be stablish using cash, so we decrease cash and create the petty fund.

Then, the expenditures will be against cash, so we don't have to use the petty fund account.

Lastly, to increase the fund we take from the cash account the 50 dollars increase.