Recall on february 1, derrick company established a $200 petty cash fund. on february 15, when the fund balance reached $7, the petty cash custodian prepared a petty cash report that summarized receipts for postage ($140) and printing ($54). complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.

Debit: Printing Expense $140

Debit: Postage Expense $54

Credit: Petty Cash $193

Credit: Cash Over and short $1

Explanation:

Expenses increase on the debit. Printing and Postage are both expenses. They are paid out, and are thus debited. Assets increase on the debit side and decrease on the credit side. Petty cash is an asset. However this cash was utilised to pay for the printing and the postage. Thus decreasing the petty cash. Therefore petty cash is credited.

However the fund balance indicated that there was $7 left. But a total of $194 ($140 + $54) was actually spent. This indicates that $6 should actually be left in the petty cash. When an actual balance differs from an unexpected balance it creates a Cash Short and Over account. This account is used to record small differences between actual and unexpected balances. Because these amounts are usually small they will be added to other small amounts and then taken to other expenses under the income statement.

answer; that person may have a larger tax bill to pay on income taxes;

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