Laguitao, Bea Catherine A.

Journalizing
Mac Mac Duds Co., a distributor of wellness equipment, decided to establish P20,000 as the company’s imprest system of
petty cash fund. The fund was established for day-to-day small expenses, where issuing checks is impracticable. The date
of establishment of fund is September 1, 201A.
Requirement: Identify the proper entry for each of the following transactions. (6 items x 5 points)
1. Record the establishment of Mac Mac Duds’ petty cash fund the entry.

Petty Cash Fund P20,000

Cash in Bank P20,000

From September 1 to September 4, payments were made for the following items:

Meeting Expense P2,750

Transportation Expense P3,500
Supplies Expense P4,350

No entry is required to record the above disbursements.

2. On September 15, the petty cash custodian decided to replenish the fund by submitting all expenditures shown
above. A check worth P10,600 was issued to replenish the petty cash fund.

Record the entry for replenishment.

Meeting Expense P2,750
Transportation Expense P3,500
Supplies Expense P4,350
P10,600

On September 30, no replenishment of petty cash was made. An examination of the fund revealed the following
items:

Bills and Coins P7,750

Petty Cash Voucher For
Advance to Employees P4,350
Office Supplies P1,250
Meeting Expenses P2,000
Postage Stamps P1,550

The cash on hand counted and paid vouchers above are worth P16,900, which is less than the amount of the
imprest balance. Hence, the difference of P3,100 is a cash shortage.
3. Record the adjusting entry on September 30, 201A to properly account the correct balance of petty cash.

JOURNAL ENTRY ON SEPTEMBER 30

Advance to Employees P4,350
Office Supplies P1,250
Meeting Expenses P2,000
Postages Stamps P1,550
Petty Cash Fund P9,150
ADJUSTING ENTRY ON SEPTEMBER 30
Petty Cash Fund P9,150
Advance to Employees P4,350
Office Supplies P1,250
Meeting Expenses P2,000
Postages Stamps P1,550

Cash Overage P3,100

Cash P3,100

4. What is the adjusted or true balance at the reporting date?

Assume that on September 30, the fund comprises the following items:

Bills and Coins P11,750

Petty Cash Voucher For
Advance to Employees P4,350
Office Supplies P1,250
Meeting Expenses P2,000
Postage Stamps P1,550

The total of the bills and coins counted and paid petty cash vouchers of P20,900 exceeds the amount of the petty
cash fund balance of P10,000. The excess is recorded as cash overage or miscellaneous income.

5. Record the adjusting entry on September 30.

JOURNAL ENTRY ON SEPTEMBER 30

Advance to Employees P4,350
Office Supplies P1,250
Meeting Expenses P2,000
Postages Stamps P1,550
Petty Cash Fund P9,150
ADJUSTING ENTRY ON SEPTEMBER 30
Petty Cash Fund P9,150
Advance to Employees P4,350
Office Supplies P1,250
Meeting Expenses P2,000
Postages Stamps P1,550

6. Record the entry for the deposit of the cash overage.

Cash Overage P3,100

Cash P3,100