Waupaca Company establishes a $350 petty cash fund on September 9. On September 30, the fund shows $104 in cash along with receipts for the following expenditures: transportation costs of merchandise purchased, $40; postage expenses, $123; and miscellaneous expenses, $80. The petty cashier could not account for a $3 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 $400.

Question

Business

Madison Hanson

25 March, 12:47

Waupaca Company establishes a $350 petty cash fund on September 9. On September 30, the fund shows $104 in cash along with receipts for the following expenditures: transportation costs of merchandise purchased, $40; postage expenses, $123; and miscellaneous expenses, $80. The petty cashier could not account for a $3 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 $400.

+5

Answers (1)

Know the Answer?

Larry Bautista · Answer 1

The journal entries are shown below:

On September 9

Petty cash A/c Dr $350

To Cash A/c $350

(Being fund is established)

On September 30

Merchandise inventory A/c Dr $40

Postage expense A/c Dr $123

Miscellaneous expenses A/c Dr $80

Cash shortage A/c Dr $3

To Cash A/c $246

(Being fund is reimbursed)

On October 1

Petty cash A/c Dr $50 ($400 - $350)

To Cash A/c $50

(Being fund is increased by $50)