Cash Short And Over Account Journal Entry
Cash short and over situation arises in case of petty cash payments and receipts and normal cash transactions. To replenish petty cash account and cash account, cash over and short account is prepared by recording the entry in both cases whether there is cash shortage or cash overage situation. Let’s Explain The Cash Short And Over Situation With The Help Of An Example: Suppose, a shoe company’s cashier received $490 from customer for shoes (sale price = $500) sold but the cashier mistakenly used the accounting software to record the entry in the books of accounts as $500 as it is the actual price stored in the accounting software. Now there is a difference between the actual amount received ($490) and the expected amount recorded in the ledger ($500). So, there is a difference of $10 which is charged to cash over and short account as an expense account. The journal entry to record is shown below: (a). In Case Of Cash Shortage Cash a/c $490