Childers Company, which uses a perpetual inventory system, has an established petty cash fund in the amount of $400. The fund was last reimbursed on November 30. At the end of December, $201 cash remained in the fund along with three (3) receipts which were as follows:

(1) $62 for freight charges related to a recent purchase of inventory,
(2) $46 for delivery charges to ship goods sold to a customer, and
(3) $81 for purchasing office supplies.

Prepare journal entry to reimburse petty cash as of December 31.

Journal Entry

Dr. Freight Charges            $62

Dr. Delivery Charges          $46

Dr. office Supplies              $81

Dr. Cash short and over    $10

Cr. Cash                              $199

Explanation:

Petty cash is a small amount of fund which is kept in the business for day to day expenses. Cash is issued from this fund for daily small expense which is inappropriate to withdraw from the bank by check.

As cash is being reimburse against all the expenses, that should be debited as these accounts have debit nature and cash is paid and decreased in this transaction we need to credit the cash account to account for this impact on the cash.

Cash balance = $400 - $201 = $199

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