A petty cash fund was established with a $600 balance.It currently has cash of $19 and petty cash tickets as shown below: $$\begin{array} { | l | r | }
\hline \text { Travel expense } & \$ 100 \
\hline \text { Office supplies expense } & 285 \
\hline \text { Equipment rental expense } & 78 \
\hline
\end{array}$$ Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Question

A petty cash fund was established with a $600 balance.It currently has cash of $19 and petty cash tickets as shown below: $$\begin{array} { | l | r | } 
\hline \text { Travel expense } & \$ 100 \
\hline \text { Office supplies expense } & 285 \
\hline \text { Equipment rental expense } & 78 \
\hline
\end{array}$$ Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Quizplus · Accepted Answer

CTo replenish the petty cash fund, the total expenses recorded in petty cash tickets must be added up and compared to the difference between the original fund balance and the current cash on hand. The expenses are $100 (Travel expense) + $285 (Office supplies expense) + $78 (Equipment rental expense) = $463. The original balance was $600, and the current cash on hand is $19, so $600 - $19 = $581 should have been spent according to the cash on hand and the original balance. However, the tickets only account for $463 of expenses. This means there is a discrepancy of $581 - $463 = $118. This discrepancy is accounted for by debiting Cash Short & Over for the missing amount ($118), indicating a shortage. The Petty Cash account is not directly affected in the replenishment process; instead, specific expense accounts are debited for the amounts on the tickets, and Cash (not Petty Cash) is credited for the total replenishment amount. However, in this question, the correct understanding involves recognizing the discrepancy and how it is accounted for, which is why A is correct for acknowledging the shortage. C is included as a correct choice based on the question's structure, but it should be noted that typically, in practice, Petty Cash is not debited in the replenishment process; specific expense accounts are. This might be a misunderstanding in the question's construction.

A Petty Cash Fund Was Established with a $600 Balance