The document provides examples of petty cash funds being distributed to three people and how any overages or shortages should be accounted for. For the first person, $160 was spent with $40 remaining as expected. For the second person, $185 was spent but there was $15 extra, meaning they were over by $15. To correct this, a journal entry is made debiting expenses and crediting cash spent plus an additional $22 to the cash short and over account.

1. Cash Short and Over Example
Show how to start a Petty Cash fund of $200
Give three people person $200
1. Give $50, 3x$20, 5x$10, 6x$5, 10x$1 (really give $200)
2. Give $50, 4x$20, 5x$10, 6x$5, 12x$1 (really give $222)
3. Give $50, 3x$20, 4x$10, 5x$5, 10x$1 (really give $185)
Debit: Petty Cash $200 Credit: Cash $200
Show how it is done correctly at first
Person 1 Scenario
Supplies......................$42
Advertising.................$118
Total...........................$160 spent; $40 left
According to me, we should have $40 left on hand. Count money. Do they balance? They do so we can journalize.
To replenish we journalize:
Debit: Supplies..................$42 Credit: Cash $160
Advertising Exp......$118
Show Cash Short and Over
Person 2 Scenario
Postage Expense....................$55
Miscellaneous Expense..........$130
Total.......................................$185 spent; $15 left
According to me, we should have $15 left on hand. Count money (should have $37). Do they balance? Are we short or
over? Why? I blame you! Do your job! Ok, fix it. How much do we need to put in to get back to $200? We need $163.
To replenish we journalize:
Debit: Postage Exp............................$55 Credit: Cash $163
Miscellaneous Exp..................$130 Cash Short and Over ($22)