Final answer:
The process involves creating accounting entries for setting up, reimbursing, and increasing a petty cash fund. The entries affect the petty cash and main cash account balances and recognize the appropriate expenses and cash shortages.
Step-by-step explanation:
Petty Cash Fund Accounting Entries
The question concerns the establishment and replenishment of a petty cash fund for Waupaca Company, which is a business-related accounting process. To address the three parts of the question, we'll prepare accounting entries for the initial setup of the petty cash fund, its replenishment, and the subsequent increase in the fund's amount.
1. Establishing the Petty Cash Fund
On September 9, the entry to establish a $480 petty cash fund is as follows:
- This entry transfers $480 from the company's main cash account to the petty cash fund.
2. Replenishing the Petty Cash Fund
On September 30, the fund has a cash balance of $204 and receipts tallying $267 (transportation-in $58, postage expenses $56, and miscellaneous expenses $153). Accounting for the shortage of $9, the total to be replenished is $276 ($480 - $204 + $9 shortage). The entry to replenish the fund is:
Debit Transportation-In Expenses $583. Increasing the Petty Cash Fund
On October 1, to increase the petty cash fund from $480 to $510, the following entry is made:
- This increases the petty cash balance and decreases the main cash balance by $30.