Question

A $70 petty cash fund has cash of $14 and receipts of $43. The journal entry to replenish the account would include a credit to

Petty Cash for $43.

Cash Over and Short for $13.

Cash for $43.

Cash for $56.

A $124 petty cash fund has cash of $14 and receipts of $106. The journal entry to replenish the account would include a

credit to Cash for $106.

debit to Cash for $106.

credit to Petty Cash for $110.

debit to Cash Over and Short for $4.

If a petty cash fund is established in the amount of $206, and contains $123 in cash and $85 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Petty Cash, $2.

Petty Cash, $85.

Cash, $83; Cash Over and Short, $2.

Cash, $83.

If the month-end bank statement shows a balance of $55200, outstanding checks are $15900, a deposit of $6300 was in transit at month end, and a check for $900 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is
	$44700.
	$45600.
	$46500.
	$63900.

Answer 1

Solution:

Once a petty cash account is set up we do not debit or credit Petty Cash during replinishment. We just debit the expenses incurred and credit cash. The amount of shortfall or over is adjusted by debiting or crediting Cash over or Short.

1.

Here the amount needed to replinish the account is $56 (expenses amount to $56). Hence we credit Cash with $56

2.

debit to Cash Over and Short for $4.

Petty Cash fund is for $124

Net Shortfall is $124 -($14+$106) = $124-$120 = $4. Hence we Debit Cash over or short to replinish

3.

Credit - Cash, $83; Cash Over and Short, $2.

The expenses incurred is $206-$123 = $83, Hence here expenses will be debited and cash will be creditied to the tune of $83

The net amount in petty cash is more by $2 ($206 - ($123+$85) = -$2. This amount shows up as an income and hence we credit Cash Over Short with $2.

4.

Month End Balance = $55200

Add:Deposit in Transit = $6300

Add: Amount Charged errornously = $900

Less: Outstanding Checks = $15900

Correct Balance = $46500