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18 August, 16:31

Gross Company established a $250 petty cash fund on January 1. On March 1, the fund contained $160 in receipts for miscellaneous expenses and $85 in cash. If the entries to record the disbursements and to replenish the fund are combined, what effect will the resulting entry have on the elements of the financial statements?

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  1. 18 August, 19:32
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    The asset will be decreased by $165.

    Explanation:

    The entry to replenish the petty cash account will decrease assets - cash by $165, increase miscellaneous expenses by $160 and increase cash shortage by $5. Total equity will decrease by $165.
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