Question

Record the journal entry for Sales and Cash Over and Short for each of the following separate situations. a. The cash register's record shows $480 of cash sales, but the count of cash in the register is $502. b. The cash register's record shows $1,052 of cash sales, but the count of cash in the register is $1,032.

Answer 1

Journal entries for cash sales discrepancies are necessary to align the cash register's record with actual cash counts. In case of excess cash, Cash Over and Short is credited, and in case of a shortage, it is debited to reflect the true sales value and cash position.

Step-by-step explanation:

Journal Entry for Sales and Cash Over and Short

When a company records sales and there's a discrepancy between the cash register record and the actual cash count, it needs to account for this difference. Let's take a look at two separate situations:

In case (a), where the cash register shows $480 of cash sales, but the cash in the register is actually $502, the entry would be:

This records the actual cash received and notes the overage as Cash Over and Short, which is an income.

In case (b), where the register records $1,052 of cash sales, but the cash count is only $1,032, the entry looks like:

Here, the Cash Over and Short is debited, representing an expense due to the shortage of cash.

It is important to accurately record these transactions to maintain proper financial statements.