Childers Company, which uses a perpetual inventory system, has an established pe

Question

Childers Company, which uses a perpetual inventory system, has an established petty cash fund in the amount of $500. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts: December 4 Freight charge for merchandise purchased $ 48 December 7 Delivery charge for shipping to customer $ 72 December 12 Purchase of office supplies $ 37 December 18 Donation to charitable organization $ 56 If, in addition to these receipts, the petty cash fund contains $275.50 of cash, the journal entry to reimburse the fund on December 31 will include: Multiple Choice A debit to Petty Cash of $85. A debit to Transportation-In of $85. A credit to Office Supplies of $72. A credit to Cash of $224.50. A credit to Cash Over and Short of $11.50

Explanation / Answer

Answer is A credit to cash of $ 224.50 Explanation: The Journal entry for reimbursement is as under: Merchandise inventory Account Dr. 48 Transportation in expense Account Dr. 72 Office Supplies account Dr. 37 Donations expense Account Dr. 56 Cash Over and Short Account Dr. 11.5        Cash account 224.5

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