A $100 petty cash fund has cash of $16 and receipts of $80. The journal entry to replenish the account would include a

Question

Quizplus · Accepted Answer

The correct entry to replenish the petty cash involves debiting various expenses as per the receipts totaling $80 and the Cash Over and Short account for $4 (the difference between the actual cash on hand [$16] and the expected cash [$20] after accounting for the $80 in receipts), and crediting Cash for $84 (the total needed to replenish the fund back to $100). Option C is correct because it recognizes the discrepancy of $4, which is not directly related to the replenishment amount but is necessary for accurate accounting.

A $100 Petty Cash Fund Has Cash of $16 and Receipts