Question

Journal Entries for Cash Shortage

a.Initial entry – Dr. Cash short or over; Cr. Cash)
b.If the cashier or cash custodian is held responsible for the cash shortage – Dr. Due from cashier; Cr. Cash short or over
c.If reasonable efforts fail to disclose the cause of the shortage – Dr. Loss from cash shortage; Cr. Cash short or ove

Answer 1

Journal entries for cash shortages involve debiting and crediting different accounts depending on the circumstances. They help track and reconcile the cash discrepancies in accounting records.

Step-by-step explanation:

In accounting, cash shortages can occur for various reasons, such as errors in recording transactions or theft. Journal entries are used to record these cash shortages and assign responsibility for them.

Here are the journal entries for cash shortages:

1. a. Initial entry: Debit Cash Short or Over and Credit Cash. This entry is made when the cash shortage is first discovered.
2. b. If the cashier is held responsible: Debit Due from Cashier and Credit Cash Short or Over. This entry is made when the cashier or cash custodian is found to be responsible for the shortage.
3. c. If the cause of the shortage cannot be determined: Debit Loss from Cash Shortage and Credit Cash Short or Over. This entry is made when reasonable efforts fail to identify the cause of the shortage.

These journal entries help to track and reconcile the cash discrepancies in the accounting records.