Final answer:
The correct journal entry to replenish a petty cash fund when $190 in receipts and $5 in cash are present is to debit various expenses and credit the Cash account. This is because petty cash must be accounted for accurately, including any shortages or overages. The multiple-choice question provided does not include the correct option for the described situation, but option b) is the closest related to the necessary entries.
Step-by-step explanation:
The subject of this question is the replenishment of a petty cash fund in accounting. When replenishing the petty cash, the correct journal entry would be to debit various expenses and credit Cash for the actual amount spent (evidenced by the receipts). If cash remains in the petty cash fund, then the amount of cash and receipts should equal the total fund amount. Thus, if there are $190 in receipts and $5 in cash, totaling $195, this suggests that there is a $5 shortage from the initial amount of $200. The correct entry to replenish the fund would be:
- Debit various expenses (totaling $190)
- Debit Cash Over and Short (for the $5 missing if considered significant, otherwise just adjusted within the expense accounts)
- Credit Cash (for the $195 to replenish the fund)
However, if the $5 difference is not considered material, it may just be included within the miscellaneous expenses instead of being accounted for separately. Therefore, the correct answer is not provided in the options given, but the closest in concept is option b) Debit Miscellaneous Expense, Credit Cash, as it involves debiting the expense account and crediting the Cash account to replenish the fund.
Money Supply Components
As for the components of the money supply:
- The $5,000 line of credit on your Bank of America card is neither in M1 nor M2 as it represents potential borrowing, not actual money.
- $50 worth of traveler's checks you have not used yet are considered part of M1, as traveler's checks are included in this category.
- $1 in quarters in your pocket is part of M1, as it is physical currency in circulation.
- $1200 in your checking account is part of M1, as checking account balances are included in M1.
- $2000 you have in a money market account is part of M2, as M2 includes M1 plus savings accounts, small-time deposits, and non-institutional money market funds.