Gannon Company?

Question

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.

Answer 1

Prepare (1) the September 9 entry to establish the fund

Dr  Petty cash $400

Cr  Cash $400

(2) the September 30 entry to both reimburse the fund and reduce it to $300.

Dr  Merchandise inventory $32

Dr  Postage expense $113

Dr  Miscellaneous expenses $87

Dr  Cash shortage $2

Cr  Petty cash $234

(being amounts expended from petty cash)

Dr  Petty cash $134

Cr  Cash $134

(being amount needed to top up the petty cash box to $300)

This site should be useful to you:

http://www.principlesofaccounting.com/ch...