Question

Waupaca Company establishes a $320 petty cash fund on September 9. On September 30, the fund shows $66 in cash along with receipts for the following expenditures: transportation-in, $51; postage expenses, $60; and miscellaneous expenses, $136. The petty cashier could not account for a $7 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 $360.

Answer 1

		Debit	Credit
9 sept.	Petty cash	320
	Cash		320
	(To establish the fund)
30 sept.	Transportation in	51
	Postage expenses	60
	Miscellaneous expense	136
	Cash short and over	7
	Petty cash		254
	( to reimburse the fund)
1 oct.	Petty cash	40
	Cash		40
	( to increase the fund to 360)

Note :-

After reimbursement the balance of the petty cash is 320

And now we have to increase it to 360

Means we have to add = 360- 320 = 40

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