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6 January, 13:00

A company wants to decrease its $200 petty cash fund to $175. The entry to reduce the fund is: Multiple Choice 1. Debit Cash Over and Short for $25; credit Petty Cash $25. 2. Debit to Cash $25; credit Petty Cash $25. 3. Debit Miscellaneous Expenses $25; credit Cash $25. 4. Debit Petty Cash for $175; debit Cash Over and Short $25; credit Cash $200. 5. Debit Petty Cash $25; credit Cash $25.

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  1. 6 January, 14:42
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    2. Debit to Cash $25; credit Petty Cash $25

    Explanation:

    The journal entry for decrease its petty cash fund is shown below:

    Cash Dr $25

    To Petty cash $25

    (Being the petty cash fund decrements is recorded)

    The computation is shown below:

    = $200 - $175

    = $200

    We simply debited the cash account and credited the petty cash account for $25 so that the proper posting could be done
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