Question

The cash register tape for Bluestem Industries reported sales of $28,372.00.

Record the journal entry that would be necessary for each of the following situations. (a) Cash to be accounted for exceeds cash on hand by $52.00. (b) Cash on hand exceeds cash to be accounted for by $26.50. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.)

Answer 1

Bluestem Industries

Journal Entries

a) Cash to be accounted for exceeds cash on hand by $52.00

Debit Cash Shortage $52.00

Credit Cash Account $52.00

To record the cash shortage.

b) Cash on hand exceeds cash to be accounted for by $26.50

Debit Cash Account $26.50

Credit Cash Overage $26.50

To record the cash overage.

Step-by-step explanation:

Handling cash in Bluestem Industries will occasionally give rise to cash shortages and cash overages. The best practise is to enact a company policy to guide actions and decisions with respect to cash shortages and overages. And then the accounting for these will be in accordance with the policy. However, the problem of shortages and overages may be pointing at other underlying problems involved in cash handling. Where only the shortages are reported frequently, then the company may need to find ways to minimize cash handling, e.g. using credit cards to receive payments and refunding employees for expenses through bank accounts.