Question

Waupaca Company establishes a $470 petty cash fund on September 9. on September 30, the fund shows $255 in cash along with receipts for the following expenditures: transportation-in, $45; postage expenses, $58; and miscellaneous expenses, $110. The petty cashier could not account for a $2 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 $530.

Answer 1

	Date	Account title and explanation	Debit	Credit
1	Sept 9	Petty cash	$ 470
		Interest payable		$ 470
		[To open the petty cash fund]
2	Sept 30	Transportation in	$ 45
		Postage expense	$ 58
		Miscellaneous expenses	$ 110
		Cash short & Over	$ 2
		Cash		$ 215
		[To replenish the petty cash fund]
3	Sept 30	Petty cash [$530-$470]	$ 60
		Interest payable		$ 60
		[To increase the petty cash fund]