Question

Waupaca Company establishes a $380 petty cash fund on September 9. On September 30, the fund shows $111 in cash along with receipts for the following expenditures: transportation costs of merchandise purchased, $57; postage expenses, $69; and miscellaneous expenses, $137. The petty cashier could not account for a $6 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 $435.

Answer 1

Entries will be as follows:

Date	Account Titles and Explanation		Debit	Credit
Sep 9	Petty Cash		380
	Cash			380
	(To establish a petty cash fund)
Sep 30	Transportation Cost		57
	Postage Expenses		69
	Misc Expenses		137
	Cash Over and Short		6
	Cash			269
	(To replenish petty cash fund)
Oct 1	Petty Cash		55
	Cash			55
	(Being fund amount increased)