Chapter 9, Problem 1PB

1.

To determine

Prepare a general ledger account of cash short or over account.

Explanation of Solution

Ledger Accounts: Ledger accounts can be defined as a T-Account which records and represents the transactions of the business. There are three components involved in the ledger accounts which are account title, credit side and debit side.

The ledger account of cash short or over account:

Cash Short or Over Account					Account No. 620
Date	Description	Post Ref.	Debit ($)	Credit ($)	Balance
					Debit ($)	Credit ($)

Table (1)

2.

To determine

Prepare a general journal of cash receipts from April 25 to April 30, 2019.

Explanation of Solution

Receipt of cash on April 25, 2019:

GENERAL JOURNAL				Page 1
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
April 25, 2019	Cash		1,399
	Cash short or over		1
	Sales Revenue			1,400
	(To record the receipt of cash)

Table (2)

• • Cash is an asset and asset is increased. Hence, the cash account is debited.
• • Cash register tape is more than the bank deposit (that is cash count less change fund), then it is considered as an expense. Hence, the cash short or over is debited.
• • Sales revenue is an income and income is increased. Hence, the sales revenue is credited.

Receipt of cash on April 26, 2019:

GENERAL JOURNAL				Page 1
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
April 26, 2019	Cash		1,051
	Cash short or over			1
	Sales Revenue			1,050
	(To record the receipt of cash)

Table (3)

• • Since, cash is an asset and asset is increased. Hence, the cash account is debited.
• • Since, cash register tape is less than the bank deposit (that is cash count less change fund), then it is considered as an income. Hence, the cash short or over is credited.
• • Since, sales revenue is an income and income is increased. Hence, the sales revenue is credited.

Receipt of cash on April 27, 2019:

GENERAL JOURNAL				Page 1
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
April 27, 2019	Cash		1,267
	Cash short or over		3
	Sales Revenue			1,270
	(To record the receipt of cash)

Table (4)

• • Since, cash is an asset and asset is increased. Hence, the cash account is debited.
• • Since, cash register tape is more than the bank deposit (that is cash count less change fund), then it is considered as an expense. Hence, the cash short or over is debited.
• • Since, sales revenue is an income and income is increased. Hence, the sales revenue is credited.

Receipt of cash on April 28, 2019:

GENERAL JOURNAL				Page 1
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
April 28, 2019	Cash		1,186
	Cash short or over			4
	Sales Revenue			1,182
	(To record the receipt of cash)

Table (5)

• • Since, cash is an asset and asset is increased. Hence, the cash account is debited.
• • Since, cash register tape is less than the bank deposit (that is cash count less change fund), then it is considered as an income. Hence, the cash short or over is credited.
• • Since, sales revenue is an income and income is increased. Hence, the sales revenue is credited.

Receipt of cash on April 29, 2019:

GENERAL JOURNAL				Page 1
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
April 29, 2019	Cash		1,093
	Cash short or over			1
	Sales Revenue			1,092
	(To record the receipt of cash)

Table (6)

• • Since, cash is an asset and asset is increased. Hence, the cash account is debited.
• • Since, cash register tape is less than the bank deposit (that is cash count less change fund), then it is considered as an income. Hence, the cash short or over is credited.
• • Since, sales revenue is an income and income is increased. Hence, the sales revenue is credited.

Receipt of cash on April 30, 2019:

GENERAL JOURNAL				Page 1
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
April 30, 2019	Cash		1,220
	Cash short or over			3
	Sales Revenue			1,217
	(To record the receipt of cash)

Table (7)

• • Since, cash is an asset and asset is increased. Hence, the cash account is debited.
• • Since, cash register tape is less than the bank deposit (that is cash count less change fund), then it is considered as an income. Hence, the cash short or over is credited.
• • Since, sales revenue is an income and income is increased. Hence, the sales revenue is credited.

Working Note:

Calculate cash short or over:

$\begin{array}{c}\text{Cash over}\text{or}\left(\text{short}\right)=\text{Cash count}-\text{Change fund}-\text{Sales per cash register}\\ =\$1,624-\$225-\$1,400\\ =\left(\$1\right)\end{array}$

Hence, the amount of cash short or over is $1.

Calculate cash:

$\begin{array}{c}\text{Cash}=\text{Cash count}-\text{Change fund}\\ =\$1,624-\$225\\ =\$1,399\end{array}$

Hence, the amount of cash is $1,399.

Calculate cash short or over:

$\begin{array}{c}\text{Cash over or}\left(\text{short}\right)=\text{Cash count}-\text{Change fund}-\text{Sales per cash register}\\ =\$1,276-\$225-\$1,050\\ =\$1\end{array}$

Hence, the amount of cash short or over is $1.

Calculate cash:

$\begin{array}{c}\text{Cash}=\text{Cash count}-\text{Change fund}\\ =\$1,276-\$225\\ =\$1,051\end{array}$

Hence, the amount of cash is $1,051.

Calculate cash short or over:

$\begin{array}{c}\text{Cash over or}\left(\text{short}\right)=\text{Cash count}-\text{Change fund}-\text{Sales per cash register}\\ =\$1,492-\$225-\$1,270\\ =\left(\$3\right)\end{array}$

Hence, the amount of cash short or over is $3.

Calculate cash:

$\begin{array}{c}\text{Cash}=\text{Cash count}-\text{Change fund}\\ =\$1,492-\$225\\ =\$1,267\end{array}$

Hence, the amount of cash is $1,267.

Calculate cash short or over:

$\begin{array}{c}\text{Cash over or}\left(\text{short}\right)=\text{Cash count}-\text{Change fund}-\text{Sales per cash register}\\ =\$1,411-\$225-\$1,182\\ =\$4\end{array}$

Hence, the amount of cash short or over is $4.

Calculate cash:

$\begin{array}{c}\text{Cash}=\text{Cash count}-\text{Change fund}\\ =\$1,411-\$225\\ =\$1,186\end{array}$

Hence, the amount of cash is $1,186.

Calculate cash short or over:

$\begin{array}{c}\text{Cash over or}\left(\text{short}\right)=\text{Cash count}-\text{Change fund}-\text{Sales per cash register}\\ =\$1,318-\$225-\$1,092\\ =\$1\end{array}$

Hence, the amount of cash short or over is $1.

Calculate cash:

$\begin{array}{c}\text{Cash}=\text{Cash count}-\text{Change fund}\\ =\$1,318-\$225\\ =\$1,093\end{array}$

Hence, the amount of cash is $1,093.

Calculate cash short or over:

$\begin{array}{c}\text{Cash over or}\left(\text{short}\right)=\text{Cash count}-\text{Change fund}-\text{Sales per cash register}\\ =\$1,445-\$225-\$1,217\\ =\$3\end{array}$

Hence, the amount of cash short or over is $3.

Calculate cash:

$\begin{array}{c}\text{Cash}=\text{Cash count}-\text{Change fund}\\ =\$1,445-\$225\\ =\$1,220\end{array}$

Hence, the amount of cash is $1,220.

3.

To determine

Post the amounts of cash short or over in the general journal.

Explanation of Solution

The ledger account of cash short or over account:

Cash Short or Over Account					Account No. 620
Date	Description	Post Ref.	Debit ($)	Credit ($)	Balance
					Debit ($)	Credit ($)
April 25. 2019	Cash	J1	1		1
April 26. 2019	Cash	J2		1	0
April 27. 2019	Cash	J3	3		3
April 28. 2019	Cash	J4		4		1
April 29. 2019	Cash	J5		1		2
April 30. 2019	Cash	J6		3		5

Table (8)

The ending balance of the cash short or over account is $5. The credit balance of cash short or over account will be recorded under the income statement as a gain to the company.