Gross Company established a $250 petty cash fund on January 1. On March 1, the fund contained $160 in receipts for miscellaneous expenses and $85 in cash. If the entries to record the disbursements and to replenish the fund are combined, what effect will the resulting entry have on the elements of the financial statements?
The entry to replenish the petty cash account will decrease assets - cash by $165, increase miscellaneous expenses by $160 and increase cash shortage by $5. Total equity will decrease by $165.
