Question

A $150 petty cash fund has cash of $54 and receipts of $83. the journal entry to replenish the account would include a

Answer 1

The option B is correct. The cash account should be credited with $96 as the cash is transferred to the petty cash department.

Further explanation:

Petty cash fund:

It refers to the fund established for paying the small amount of expenditures which are incurred on a daily basis. The petty cash fund is suitable for small payments where the check is not useful.

Replenishing petty cash:  

Petty cash department has to maintain the minimum balance in order to meet the minor expenses of the business. When the balance of the petty cash book goes below the minimum balance; the custodian of the petty cash department requests funds from the management of the company to maintain the minimum balance.

In the current case, the minimum balance of petty cash book is $150, and petty cash department has $54. So, it requires only $96.  

Compute the amount replenished:

Amount replenished = Minimum Fund – (Cash available + receipts)

                                = $150 – ($54 + $83)

                               = $13

Thus, the cash account should be debited to cash short and over for $13

Learn more:

1. Learn more about journal entry related for petty cash

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2. Learn more about the recording journal entry for purchase

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3. Learn more about the journal entry  

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Answer details:  

Grade: Middle School

Subject: Accounts

Chapter: Journal Entries

Keywords: A $150, petty cash fund, $54, receipts, of $83,  journal entry to, replenish, the account, would include a debit, cash short, over $13, Petty Cash, Short and Over, $13, petty cash fund, Replenishing petty cash.

Answer 2

The correct answer is option b, debit to cash short and over for $13. The petty cash fund is a debit account, meaning it increases with entries posted on the debit side and decreases with entries posted to the credit side. Replenishing the fund here means injecting cash to reach the initial $150. To obtain the replenishing amount, you just subtract the debit entries in the fund $54 and $83 from the $150, i.e. $150 - ($54 + $83) = $13.