Question

(Petty Cash) The petty cash fund of Fonzarelli’s Auto Repair Service, a sole proprietorship, contains the following.

1. Coins and Currency		\(15.20
2. Postage Stamps		2.90
3. An I.O.U from Cunningham, an employee, for cash advance		40
4. Check payable to Fonzarelli’s Auto Repair from Pottsie Weber, an employee, marked NSF		34
5. Vouchers for the following:
Stamps	20
Two Rose Bowl tickets for Nick Fonzarelli	170
Printer cartridge	14.35	204.35
		\)296.45

The general ledger account Petty Cash has a balance of $300.

Instructions

Prepare the journal entry to record the reimbursement of the petty cash fund.

Short answer

Cash short and over of the business entity equals$6.45.

Step-by-step solution

Definition of Prepaid Expenses

The expenses incurred by the business entity for any service or product that will be received in a future period is known as prepaid expense. It is reported as an asset of the business.

Journal Entry to Record the reimbursement of Petty Cash Funds

Date	Accounts and Explanation	Debit $	Credit $
	Accounts receivables$\left(\$40+\$34\right)$	$74
	Maintenance expenses	$14.35
	Drawings	$170
	Postage expenses$\left(\$20+\$2·90\right)$	$17.10
	Prepaid expenses (postage)	$2.90
	Cash short and over (balancing figure)	$6.45
	Cash$\left(\$300+\$15·20\right)$		$284.80