Albany Co,Which Uses a Perpetual Inventory System,has a $400 Petty Cash

question 7

Multiple Choice

Albany Co.,which uses a perpetual inventory system,has a $400 petty cash fund.At the end of the first month,the accumulated receipts represent $60 for delivery expenses,$140 for incoming freight charges,$90 for entertainment expense,and $20 for miscellaneous expenses.The fund has a balance of $105.The journal entry to record the reimbursement of the account is:

• A)Debit Petty Cash,$295; Credit Cash,$295.
• B)Debit Merchandise Inventory,$200; Debit Entertainment Expense,$90; Debit Miscellaneous Expenses,$20; Credit Cash,$295; Credit Cash Over and Short,$15.
• C)Debit Merchandise Inventory,$140; Debit Delivery Expense,$60; Debit Entertainment Expense,$90; Debit Miscellaneous Expenses,$20; Credit Cash,$295; Credit Cash Over and Short,$15.
• D)Debit Merchandise Inventory,$140; Debit Delivery Expense,$60; Debit Entertainment Expense,$90; Debit Miscellaneous Expenses,$20; Credit Cash,$310.
• E)Debit Delivery Expense,$200; Debit Entertainment Expense,$90; Debit Miscellaneous Expenses,$20; Credit Cash,$295; Credit Cash Over and Short,$15.

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Definitions:

Preferred Stockholders

Investors who own preferred shares in a company, which have a higher claim on assets and earnings than common stock, often receiving dividends before common stockholders.

Common Stockholders

Individuals or entities that own common stock in a corporation, granting them rights to dividends and voting in corporate matters.

Cumulative

This term refers to the total amount accumulated over a period of time, often used in the context of dividends or other figures that add up over multiple periods.

Dividends in Arrears

Unpaid dividends on cumulative preferred stock that must be paid out before any dividends can be issued on common stock.