A company plans to decrease a $200 petty cash fund to $75. The current balance in the account includes $45 petty cash payment in receipts and $165 in currency. The entry to reduce the fund will include a:

Question

Quizplus · Accepted Answer

To decrease the petty cash fund from $200 to $75, a debit of $90 is needed ($200 - $75 = $125 decrease). This will be recorded by debiting the Cash account for $90. There is no need for a debit to Cash Short and Over or Miscellaneous Expenses, nor a credit to Petty Cash or Cash.

A Company Plans to Decrease a $200 Petty Cash Fund