TIP: Because only $12 was found in the fund on May 15, there was a shortage of $1 which must be recorded by a debit to the Cash Over and Short account.
TIP: The balance of the Petty Cash account changes only when the fund is established or the size of the fund is increased or decreased. The Petty Cash account balance is not affected by expenditures from the fund nor by replenishments. (No journal entry is made at the time an expenditure is made. Expenditures from the fund are accounted for at the date of replenishment.)
TIP: Petty Cash is not normally reported separately on the balance sheet. The balance of the Petty Cash account is generally lumped together with all other cash items when a balance sheet is prepared.