Petty Cash System: Petty cash system is a management of small cash transactions where payment of petty expenses is made out of it. It contains fixed balance which is maintained on monthly basis by the cashier. Journal Entries : Entries passed to record all the financial transactions in chronological manner are known as journal entries. The rules to pass journal entries are, Debit what comes in credit what goes out. Debit all income, gains and credit all expenses, losses. Debit the receiver and credit the giver. To prepare: Journal entries to replenish petty cash fund.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 6, Problem 1MCQ

To determine

Petty Cash System:

Petty cash system is a management of small cash transactions where payment of petty expenses is made out of it. It contains fixed balance which is maintained on monthly basis by the cashier.

Journal Entries:

Entries passed to record all the financial transactions in chronological manner are known as journal entries.
The rules to pass journal entries are,

Debit what comes in credit what goes out.

Debit all income, gains and credit all expenses, losses.

Debit the receiver and credit the giver.

To prepare: Journal entries to replenish petty cash fund.

Expert Solution & Answer

Explanation of Solution

e.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
	Expenses		420
	Cash over and short		5
	Cash			425
	(To replenish petty cash)

Table(1)

All expenses have debit balance. Expenses increase and get debited. So, expense account debited with $420.
$75 is in the cash box out of total petty cash fund $500. This implies $425 ($500-$75) should have spent. Since actual expenses are $420 and spent $425, difference of this $5 is debited to the ‘Cash over and short’ account.
Cash is an asset account. Cash has gone out of the bank so it is decreased. Hence, cash is credited with $425.

Hence, correct option is e.

A debit to cash for $75 is not appropriate since cash has gone out of the bank and not received so; cash account is credited with $ 425 instead of debiting $75.
Total of cash $425 has gone thus cash account should be credited with $425 instead of $75.
Expenses are debited with $420 due to their payment out of petty cash. Thus credit to petty cash for $420 is inappropriate.
Cash over and short account is debited with $5 instead of credited due to few less payment of expenses with $5.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Need answer

A broadcasting company failed to make a year-end accrual of $350,000 for fines due to a violation of FCC rules. Its tax rate is 44%. As a result of this error, net income was: general Accounting

Berkley Shoe Company's work-in-process inventory on July 1 has a balance of $25,600, representing Job No. 314. During July, $54,800 of direct materials were requisitioned for Job No. 314, and $37,200 of direct labor cost was incurred on Job No. 314. Manufacturing overhead is allocated at 130% of direct labor cost. Actual manufacturing overhead costs incurred in July amounted to $46,200. No new jobs were started during July. Job No. 314 is completed on July 30. Is manufacturing overhead overallocated or under-allocated for the month of July and by how much?

Answer 2

Question

Chapter 6, Problem 1MCQ

To determine

Petty Cash System:

Petty cash system is a management of small cash transactions where payment of petty expenses is made out of it. It contains fixed balance which is maintained on monthly basis by the cashier.

Journal Entries:

Entries passed to record all the financial transactions in chronological manner are known as journal entries.
The rules to pass journal entries are,

Debit what comes in credit what goes out.

Debit all income, gains and credit all expenses, losses.

Debit the receiver and credit the giver.

To prepare: Journal entries to replenish petty cash fund.

Expert Solution & Answer

Explanation of Solution

e.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
	Expenses		420
	Cash over and short		5
	Cash			425
	(To replenish petty cash)

Table(1)

All expenses have debit balance. Expenses increase and get debited. So, expense account debited with $420.
$75 is in the cash box out of total petty cash fund $500. This implies $425 ($500-$75) should have spent. Since actual expenses are $420 and spent $425, difference of this $5 is debited to the ‘Cash over and short’ account.
Cash is an asset account. Cash has gone out of the bank so it is decreased. Hence, cash is credited with $425.

Hence, correct option is e.

A debit to cash for $75 is not appropriate since cash has gone out of the bank and not received so; cash account is credited with $ 425 instead of debiting $75.
Total of cash $425 has gone thus cash account should be credited with $425 instead of $75.
Expenses are debited with $420 due to their payment out of petty cash. Thus credit to petty cash for $420 is inappropriate.
Cash over and short account is debited with $5 instead of credited due to few less payment of expenses with $5.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 6, Problem 1MCQ

To determine

Petty Cash System:

Petty cash system is a management of small cash transactions where payment of petty expenses is made out of it. It contains fixed balance which is maintained on monthly basis by the cashier.

Journal Entries:

Entries passed to record all the financial transactions in chronological manner are known as journal entries.
The rules to pass journal entries are,

Debit what comes in credit what goes out.

Debit all income, gains and credit all expenses, losses.

Debit the receiver and credit the giver.

To prepare: Journal entries to replenish petty cash fund.

Expert Solution & Answer

Explanation of Solution

e.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
	Expenses		420
	Cash over and short		5
	Cash			425
	(To replenish petty cash)

Table(1)

All expenses have debit balance. Expenses increase and get debited. So, expense account debited with $420.
$75 is in the cash box out of total petty cash fund $500. This implies $425 ($500-$75) should have spent. Since actual expenses are $420 and spent $425, difference of this $5 is debited to the ‘Cash over and short’ account.
Cash is an asset account. Cash has gone out of the bank so it is decreased. Hence, cash is credited with $425.

Hence, correct option is e.

A debit to cash for $75 is not appropriate since cash has gone out of the bank and not received so; cash account is credited with $ 425 instead of debiting $75.
Total of cash $425 has gone thus cash account should be credited with $425 instead of $75.
Expenses are debited with $420 due to their payment out of petty cash. Thus credit to petty cash for $420 is inappropriate.
Cash over and short account is debited with $5 instead of credited due to few less payment of expenses with $5.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 6, Problem 1MCQ

To determine

Petty Cash System:

Petty cash system is a management of small cash transactions where payment of petty expenses is made out of it. It contains fixed balance which is maintained on monthly basis by the cashier.

Journal Entries:

Entries passed to record all the financial transactions in chronological manner are known as journal entries.
The rules to pass journal entries are,

Debit what comes in credit what goes out.

Debit all income, gains and credit all expenses, losses.

Debit the receiver and credit the giver.

To prepare: Journal entries to replenish petty cash fund.

Expert Solution & Answer

Explanation of Solution

e.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
	Expenses		420
	Cash over and short		5
	Cash			425
	(To replenish petty cash)

Table(1)

All expenses have debit balance. Expenses increase and get debited. So, expense account debited with $420.
$75 is in the cash box out of total petty cash fund $500. This implies $425 ($500-$75) should have spent. Since actual expenses are $420 and spent $425, difference of this $5 is debited to the ‘Cash over and short’ account.
Cash is an asset account. Cash has gone out of the bank so it is decreased. Hence, cash is credited with $425.

Hence, correct option is e.

A debit to cash for $75 is not appropriate since cash has gone out of the bank and not received so; cash account is credited with $ 425 instead of debiting $75.
Total of cash $425 has gone thus cash account should be credited with $425 instead of $75.
Expenses are debited with $420 due to their payment out of petty cash. Thus credit to petty cash for $420 is inappropriate.
Cash over and short account is debited with $5 instead of credited due to few less payment of expenses with $5.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 6, Problem 1MCQ

To determine

Petty Cash System:

Petty cash system is a management of small cash transactions where payment of petty expenses is made out of it. It contains fixed balance which is maintained on monthly basis by the cashier.

Journal Entries:

Entries passed to record all the financial transactions in chronological manner are known as journal entries.
The rules to pass journal entries are,

Debit what comes in credit what goes out.

Debit all income, gains and credit all expenses, losses.

Debit the receiver and credit the giver.

To prepare: Journal entries to replenish petty cash fund.

Expert Solution & Answer

Explanation of Solution

e.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
	Expenses		420
	Cash over and short		5
	Cash			425
	(To replenish petty cash)

Table(1)

All expenses have debit balance. Expenses increase and get debited. So, expense account debited with $420.
$75 is in the cash box out of total petty cash fund $500. This implies $425 ($500-$75) should have spent. Since actual expenses are $420 and spent $425, difference of this $5 is debited to the ‘Cash over and short’ account.
Cash is an asset account. Cash has gone out of the bank so it is decreased. Hence, cash is credited with $425.

Hence, correct option is e.

A debit to cash for $75 is not appropriate since cash has gone out of the bank and not received so; cash account is credited with $ 425 instead of debiting $75.
Total of cash $425 has gone thus cash account should be credited with $425 instead of $75.
Expenses are debited with $420 due to their payment out of petty cash. Thus credit to petty cash for $420 is inappropriate.
Cash over and short account is debited with $5 instead of credited due to few less payment of expenses with $5.

Answer 6

Chapter 6, Problem 1MCQ

To determine

Petty Cash System:

Petty cash system is a management of small cash transactions where payment of petty expenses is made out of it. It contains fixed balance which is maintained on monthly basis by the cashier.

Journal Entries:

Entries passed to record all the financial transactions in chronological manner are known as journal entries.
The rules to pass journal entries are,

Debit what comes in credit what goes out.

Debit all income, gains and credit all expenses, losses.

Debit the receiver and credit the giver.

To prepare: Journal entries to replenish petty cash fund.

Expert Solution & Answer

Explanation of Solution

e.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
	Expenses		420
	Cash over and short		5
	Cash			425
	(To replenish petty cash)

Table(1)

All expenses have debit balance. Expenses increase and get debited. So, expense account debited with $420.
$75 is in the cash box out of total petty cash fund $500. This implies $425 ($500-$75) should have spent. Since actual expenses are $420 and spent $425, difference of this $5 is debited to the ‘Cash over and short’ account.
Cash is an asset account. Cash has gone out of the bank so it is decreased. Hence, cash is credited with $425.

Hence, correct option is e.

A debit to cash for $75 is not appropriate since cash has gone out of the bank and not received so; cash account is credited with $ 425 instead of debiting $75.
Total of cash $425 has gone thus cash account should be credited with $425 instead of $75.
Expenses are debited with $420 due to their payment out of petty cash. Thus credit to petty cash for $420 is inappropriate.
Cash over and short account is debited with $5 instead of credited due to few less payment of expenses with $5.

Answer 7

Chapter 6, Problem 1MCQ

To determine

Petty Cash System:

Petty cash system is a management of small cash transactions where payment of petty expenses is made out of it. It contains fixed balance which is maintained on monthly basis by the cashier.

Journal Entries:

Entries passed to record all the financial transactions in chronological manner are known as journal entries.
The rules to pass journal entries are,

Debit what comes in credit what goes out.

Debit all income, gains and credit all expenses, losses.

Debit the receiver and credit the giver.

To prepare: Journal entries to replenish petty cash fund.

Answer 8

Expert Solution & Answer

Explanation of Solution

e.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
	Expenses		420
	Cash over and short		5
	Cash			425
	(To replenish petty cash)

Table(1)

All expenses have debit balance. Expenses increase and get debited. So, expense account debited with $420.
$75 is in the cash box out of total petty cash fund $500. This implies $425 ($500-$75) should have spent. Since actual expenses are $420 and spent $425, difference of this $5 is debited to the ‘Cash over and short’ account.
Cash is an asset account. Cash has gone out of the bank so it is decreased. Hence, cash is credited with $425.

Hence, correct option is e.

A debit to cash for $75 is not appropriate since cash has gone out of the bank and not received so; cash account is credited with $ 425 instead of debiting $75.
Total of cash $425 has gone thus cash account should be credited with $425 instead of $75.
Expenses are debited with $420 due to their payment out of petty cash. Thus credit to petty cash for $420 is inappropriate.
Cash over and short account is debited with $5 instead of credited due to few less payment of expenses with $5.