Question

Waupaca Company establishes a $400 petty cash fund on September 9. On September 30, the fund shows $122 in cash along with receipts for the following expenditures: transportation costs of merchandise purchased, $51; postage expenses, $73; and miscellaneous expenses, $141. The petty cashier could not account for a $13 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 $460.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

September 9

Petty cash fund Dr, $400

To Cash $400

(Being establishment of petty cash fund is recorded)

Here we debited the petty cash fund as assets is increasing while we credited the cash is decreasing.

September 30

Merchandise Inventory Dr, $51

Postage expense Dr, $73

Cash Short and over Dr, $13

Miscellaneous Dr, $141

To Petty Cash $278

(Being reimburse of petty cash find is recorded)

Here we debited the merchandise Inventory, postage expense, cash short and over and miscellaneous as it is expenses while we credited the petty cash as is reimbursed.

October 1

Petty cash fund Dr, $60

($460 - $400)

To Cash $60

(Being increase in petty cash fund is recorded)

Here we debited the petty cash fund as assets is increasing while we credited the cash is decreasing.