Question

1. A company establishes a petty cash account and designates one employee as petty cash custodian. The original amount included in the petty cash fund is $500. The fund will be replenished on the first of each month, after the petty cash custodian presents receipts for disbursements to the general cashier. The following disbursements are made in January:

Office Supplies $127

Misc. Expense $83

Entertainment $84

The balancein the petty cash box at the end of January is $196.

Prepare the journal entry to replensih the account.

2. Johnson Co. monelty bank statement shows a balance of $53,900. Reconciliation of the statement with company books reveals the folowing information:

Bank Service Charge 10

Insufficient Funds Check 650

Checks Outstanding 1500

Deposits In Transit 350

Check deposited by Johnson Co. for customer payment on account properly cleared by the bank in the amount $125, but improperly recorded by Johnson Co. as $152.

Compute the net cash balance after the reconciliation.

  

Answer 1

(1):- (a)Petty Cash.....dr. 500

To. Cash. 500

(b) Office Supplies Expense....dr. 127 Miscellaneous Expense....dr. 83

Entertainment exp ............dr. 84 To Cash Short and Over. 96. To Cash. 196

(196- 127-83-84)= 96 cash short and over a/c

( 2 ):- ans:- $52,750.

-->> The reconciling items that need to be adjusted to the bank balance are: checks outstanding (?1,500) and deposit in transit (+350). The net cash after the reconciliation is: Bank balance $53,900 ? 1,500 + 350 = $52,750. The bank service charge and insufficient funds are already reflected in the bank balance. The error is on johnson co books, not on the bank statement, and therefore it does not need to be included in the reconciliation.