ACCT 201 Principles of Financial Accounting Practice Exam - Chapter 6 Reporting & Analyzing Cash and Internal Controls Dr. Fred Barbee Solution to Short-Problem #2

Short Problem #2

A company established a $1,000 petty cash fund by issuing a check to the custodian (petty cashier) on October 1. On October 15, the petty cash fund was replenished and increased to $1,250 in total. The contents of the petty cash fund at the time of the October 15 replenishment were:

Currency and coins		$112
Petty cash receipts for:
Transportation-in for inventory	$139
Delivery expense	238
Repairs to office equipment	147
Postage	214
Entertainment of customers	153	891
Total		$1,003

Prepare the general journal entry to record both the reimbursement and the increase of the petty cash fund on October 15.

Solution:

Merchandise Inventory	139
Delivery Expense	238
Repairs Expense	147
Postage Expense	214
Entertainment Expense	153
Petty Cash	250
Cash Over and Short		3
Cash		1,138