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Entry to be made for Operating a petty cash fund.
Gannon Company establishes a $400 petty cash fund on September 9. On September 30, the fund shows $166 in cash along with receipts for the following expenditures: transportation-in, $32; postage expenses, $113; and miscellaneous expenses, $87. The petty cashier could not account for a $2 shortage in the fund. Cannon uses the perpetual system in accounting for merchandise inventory. Prepare (I) the September 9 entry to establish the fund and (2) the September30 entry to both reimburse the fund and reduce it to $300.
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