Prepare journal entries for each of the following. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Issued a check to establish a petty cash fund of $500. b. The amount of cash in the petty cash fund is $160. Issued a check to replenish the fund, based on the following summary of petty cash receipts: store supplies, $199 and miscellaneous selling expense, $126. Record any missing funds in the cash short and over account. For a compound transaction, if an amount box does not require an entry, leave it blank.

A.Dr Petty cash $500

Cr To Cash Account $500

B. Dr Store supplies $199

Dr Miscellaneous expenses $126

Dr Cash over and short $15

Cr To Cash Account $340

Explanation:

Petty cash can be defined to a small or little amount of currency and coins which a company tend to use to pay small amounts without writing a cheque.

a)The Journal entry to create a petty cash fund with $500 will be recorded as:

Dr Petty cash $500

Cr To Cash Account$500

b) Preparation of the Journal entry to record any missing funds in the cash short and over account.

The total expenses as per receipts will be:

199+126=325

The balance of petty cash will have:

500-325=$175

The balance available in the petty cash fund is given as $160, which is short by $15 (175-160).

Therefore we need to replenish the fund with $ 340 which is Available fund of $160 -Original fund $500

Hence, the difference in the fund due to error will be treated just like an expense in which debit will be given to an account called ''cash over and short"

Thus, the debit is given to the expenses and credit to cash account.

The entry to record replenishing the fund would not credit the Petty Cash account.

The entry will be

Dr Store supplies $199

Dr Miscellaneous expenses $126

Dr Cash over and short $15

Cr To Cash Account $340

explanation:

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