Question

Waupaca Company establishes a $450 petty cash fund on September 9 . On September 30 , the fund shows $224 in cash along with receipts for the following expenditures; transportation-in, $41; postage expenses, $62; 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 $515 Journal entry worksheet Prepare the journal entry to establish the petty cash fund. Note: Enter debits before credits.

Answer 1

To properly document the petty cash transactions for Waupaca Company, journal entries must be made to establish and reimburse the fund as well as to adjust its total amount when increasing the fund.

Step-by-step explanation:

The question of the Waupaca Company establishing and reimbursing a petty cash fund involves the creation of journal entries under the perpetual inventory system. To address the scenario presented:

• The September 9 entry to establish the fund is a debit to Petty Cash and a credit to Cash for $450.
• On September 30, the reimbursing entry will include debits to Transportation-in, Postage Expenses, and Miscellaneous Expenses for the respective amounts of $41, $62, and $111. The shortage of $12 is debited to Cash Over and Short. The total debit sum of $226 is offset by a credit to Cash for the same amount.
• Finally, an October 1 entry to increase the petty cash fund from $450 to $515 will involve a debit to the Petty Cash for $65 and a credit to Cash for $65.

The importance of accurately managing petty cash is highlighted by this example; keeping meticulous records ensures financial integrity and simplifies the reconciliation process at the end of a financial period.