Potter Company's petty cash fund was established on January 1, 2013 with $500. On January 31, 2013 a count of the fund revealed: $103 in cash remaining and vouchers for miscellaneous payments totaling $400. What effect will the necessary entries to replenish the fund have on the company's financial statements?

Question

Quizplus · Accepted Answer

It will take $397 in order to replenish the petty cash account to $500. Miscellaneous expenses will be increased by $400, offset by $3 cash over, and cash will be reduced by $397. It is reported as a cash outflow for operating activities.

Potter Company's Petty Cash Fund Was Established on January 1