If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Question

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When replenishing a petty cash fund, the total amount of cash disbursed (in this case $84) should be credited to the Petty Cash account, since the purpose of the replenishment is to restore the fund to its original amount. However, the amount of cash on hand may not match the total receipts, which is why a Cash Over and Short account is used. If the cash on hand is less than the receipts, the difference is debited to Cash Over and Short. If the cash on hand is greater than the receipts, the difference is credited to Cash Over and Short. In this case, since the total receipts are $84 but the cash on hand is only $119, there is a $3 shortage. Therefore, the entry should include a credit of $81 to Petty Cash and a credit of $3 to Cash Over and Short, for a total credit of $84. The correct answer is C.

If a Petty Cash Fund Is Established in the Amount