At the end of the day, the cash register tape shows $1,020 in cash sales but the count of cash in the register is $1,035. The proper entry to record cash sales and its overage is:
A)Debit Cash $1,020; credit Sales $1,020.
B)Debit Cash $1,035; credit Sales $1,035.
C)Debit Cash $1,035; credit Sales $1,020; credit Cash Over and Short $15.
D)Debit Cash $1,020; debit Cash Over and Short for $15; credit Sales $1,035.
E)Debit Cash Over and Short $15; credit Cash $15.

Question

Quizplus · Accepted Answer

The cash sales are recorded by debiting Cash and crediting Sales for $1,020. However, since the cash count is higher than the cash sales recorded, there is an overage of $15, which needs to be recorded. Therefore, Cash needs to be debited for the higher amount of $1,035 (which includes the overage) and Sales needs to be credited for the actual sales amount of $1,020. The overage of $15 needs to be credited to a separate account called Cash Over and Short. So the entry would be: Debit Cash $1,035; credit Sales $1,020; credit Cash Over and Short $15.

At the End of the Day, the Cash Register Tape