Question

Journalize the entries to record the following:

1. Check is issued to establish a petty cash fund of $1,300.
2. The amount of cash in the petty cash fund is now $429. Check is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $505; miscellaneous selling expense, $209; miscellaneous administrative expense, $131. (Because the amount of the check to replenish the fund plus the balance in the fund do not equal $1,300, record the discrepancy in the cash short and over account.)

Answer 1

a. Entry to establish petty cash fund
Account Titles and Explanation	Debit	Credit
Petty Cash	$1,300
Cash		$1,300
(To establish petty cash fund)
b. Entry to replenish the petty cash fund
Office Expenses	$505
Miscellaneous Selling Expense	$209
Miscellaneous Administrative Expense	$131
Cash short and over            [Refer working note]	$26
Cash                      [$1,300 - $429]		$871
(To replenish the fund)

.

.

Working note - Calculation of Cash short and Over:
	Amount	Amount
Original Petty cash fund balance		$1,300
Less: Cash remained in the petty cashbox after incurring expenses (Given in question)		$429
Cash used for petty expenses		$871
Vouchers available for:
office supplies	$505
miscellaneous selling expense	$209
miscellaneous administrative expense	$131	$845
Cash short and Over       [$871 - $845]		$26