Theodore Bear, Inc. established a $200 petty cash account on January 2, 2009. On October 5, 2009,

Question:

Theodore Bear, Inc. established a $200 petty cash account on January 2, 2009. On October 5, 2009, the account was increased to $500. On December 3, 2009, the petty cash drawer contained $219.04 in cash and coins and the following receipts:

Required:
(a) Record the January 1 journal entry to establish the petty cash fund.
(b) Record the October 5 journal entry to increase the amount of the petty cash fund.
(c) Record the entry to replenish petty cash on December 3.
(d) Assume that instead of $219.04, the amount of cash in the petty cash envelope was $120.75. Provide two possible situations that might cause the petty cash difference. What actions might you take to correct future instances of the two situations just discussed?