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Recording Petty Cash Transactions

On July 1, Acton Company established an Imprest (petty cash) fund in the amount of $400.00 in cash from a check drawn for the purpose of establishing the fund. On July 31, the petty cash fund has cash of $31.42 and the following receipts on hand: for merchandise received $204.30; freight-in, $65.74; laundry service, $84.00; and miscellaneous expense, $14.54. A check was drawn to replenish the fund.
On Aug. 31, the petty cash fund has cash of $55.00 and the following receipts on hand: merchandise, $196.84; freight-in, $76.30; laundry service, $84.00; and miscellaneous expense, $7.86. The petty cash custodian is notable to account for the excess cash in the fund. A check is drawn to replenish the fund.

1. In Excel (journal) form, prepare the entries necessary to record each of these transactions. The company uses the periodic inventory system.

The entry to record the setting up of petty cash is
July 1 Petty Cash Dr 400
Cash Cr 400

The entry to replenish the fund is
July 31 Purchases Dr 204.30
Freight - in Dr 65.74
Laundry service Expense Dr 84
Miscellaneous Expense Dr 14.54
Cash Cr 368.58

In the periodic inventory systems merchandise purchases are debited to purchases account

On Aug 31, the total expense is 196.84 + 76.30 + 84 + 7.86 = 365. The balance cash should be $35. The actual cash balance is $55. The excess cash of $20 would be credit to cash over and short account. The entry is
July 31 Purchases Dr 196.84
Freight - in Dr 76.30
Laundry service Expense Dr 84
Miscellaneous Expense Dr 7.86
Cash over and short Cr 20
Cash Cr 345

Solution Summary

This solution prepares the entries necessary to record a number of given transactions.

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