Question

1. Havermill Co. establishes a $490 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $97 for Office Supplies, $185 for merchandise inventory, and $46 for miscellaneous expenses. The fund has a balance of $162. On October 1, the accountant determines that the fund should be increased by $98. The journal entry to record the establishment of the fund on September 1 is:

2. A company wants to decrease its $200.00 petty cash fund to $150.00. The entry to reduce the fund is:

3. Easton Co. deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $61,209. Easton's June bank statement shows $59,149 on deposit in the bank. Determine the adjusted cash balance using the following information:

Deposit in transit	$	4,100
Outstanding checks	$	2,025
Check printing fee, not yet recorded by company	$	17
Interest earned on account, not yet recorded by the company	$	32

The adjusted cash balance should be:

4. In the process of reconciling its bank statement for January, Maxi's Clothing's accountant compiles the following information:

Cash balance per company books on January 30	$	7,225
Deposits in transit at month-end	$	2,300
Outstanding checks at month-end	$	770
Bank service charges	$	50
EFT automatically deducted monthly, not yet recorded by Maxi	$	880
An NSF check returned on a customer account	$	515

The adjusted cash balance per the books on January 31 is:

5. Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check. Ryan's June bank statement shows $23,361 on deposit in the bank. Ryan's comparison of the bank statement to its cash account revealed the following:

Deposit in transit	2,450
Outstanding checks	1,107

Additionally, a $48 check written and recorded by the company correctly, was recorded by the bank as a $84 deduction.
The adjusted cash balance per the bank records should be:

6. If a check correctly written and paid by the bank for $512 is incorrectly recorded in the company's books for $443, how should this error be treated on the bank reconciliation?

Answer 1

1. Petty cash is a small amount of fund (cash)which is kept aside for small day to day expenditures.such expenses are mainly petty in nature like tea expense, calculator purchase or office chair repairing.

when the petty cash is established Cash is reduced so it will be credited and petty cash will be debited

so entry on September 1 would be:

September 1	Petty Cash	$490
	Cash		$490

2. If one wants to reduce petty cash balance then petty cash will be credited and cash will be debited.

Entry would be opposite of what we did in 1 above

reduction ($200-$150)=$50

date	Cash	$50
	Petty Cash		$50