Exercise 8-4
Petty cash fund with a shortage
Gannon Company establishes a $400 petty cash fund on September 9. On September 30, the fund
shows $166 in cash along with receipts for the following expenditures: transportation-in, $32; postage
expenses, $113; and miscellaneous expenses, $87. The petty cashier could not account for a $2 shortage
in the fund. Gannon uses the perpetual system in accounting for merchandise inventory. Prepare
(1) the September 9 entry to establish the fund and (2) the September 30 entry to both reimburse the
fund and reduce it to $300.
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