Journal entry is not required for a cash payment of transactions from a petty cash fund. You need to determine how much the petty cash fund is set at. Subject: Accounting; subsidiary journal used to record all petty expenses. The cash is given to the petty cashier either on ordinary system or imprest system which are briefly explained below: 1. Petty Cash should be set up as a "checking type account." The petty cash journal entry is a debit to the petty cash account and a credit to the cash account. Petty Cash is a small amount of cash that needs to be kept in the office for the utilization of daily small expenditures. The custodian would use the $176 to restore the amount of cash to $200. Demonstration of Typical Petty Cash Journal Entries. Since the petty cash vouchers total only $92.60, the amounts do not agree and the fund is short $ 1.30 ($93.90 needed – $92.60 in vouchers). This shows you how much cash you have withdrawn from the fund. Want a simple way to record petty cash records in your books? And, you must record a petty cash journal entry when you put money into the petty cash fund and when money leaves the fund. With an imprest system the balance on the fund (cash + vouchers) is always constant (300). When a petty cash fund comes down to a minimum limit, it is replenished for the spent money. The petty cash custodian refills the petty cash drawer or box, which should now contain the original amount of cash that was designated for the fund. You must record petty cash transactions, even if you think they’re too low to matter. The cash allocated for petty expenditures for a specific period is entered on the credit side of general cash book and on the debit side of petty cash book. All the incomes and expenses which are practically not possible to settle through a bank need to be settled none other than cash (no barter transaction in a moder… Alternatively, the cashier could simply count out the cash for the petty cash fund, if there are enough bills and coins on the premises. The entry is: The balance in the petty cash account is now $300, which is where it was originally authorized to be. Lastly, you should choose a maximum amount that employees can request for petty cash transactions. There are certain business transactions predefined to post in the cash journal, such as cash receipts, cash expenses, cash withdrawal from bank, etc. If you want to know about Petty Cash and Journal Entries related to Petty Cash, please check, What is Petty Cash Journal? The entry must show an increase in your Petty Cash account and a decrease in your Cash account. You must debit your Postage, Meals and Entertainment, and Office Supplies accounts and credit your Petty Cash account. Chapter 3 / Lesson 23. The petty cash journal contains a summarization of the payments from a petty cash fund. You can deduct some petty cash purchases from your business taxes if you have the proper records to support your claims. Cash of P10,944 B. And, create a petty cash slip indicating the amount, employee’s name, and date when you give employees petty cash. The journal entry to start a petty cash fund only happens once - when the petty cash is first taken out of the cash bank account and put into the petty cash fund. The establishment of a petty cash system begins by making out a check to cash, cashing it, and placing the cash in a petty cash box: A petty cash custodian should be designated to have responsibility for safeguarding and making payments from this fund. To subtract money from Petty Cash, write a check (don't print one, just record it as being written.) Related Content. Petty Cash Accounting Journal Template. The cashier creates a journal entry to record the petty cash receipts. What is the Petty Cash Journal? C) recording shortages in the fund. If you decide to establish a petty cash fund, doing the following can help simplify your petty cash accounting responsibilities: The petty cash custodian is an employee responsible for petty cash management and distribution to employees. Journal entry to replenish petty cash fund On April 15, 20X1, office staff brought the following receipts and received $50 cash to replenish petty cash fund. Debtors Collection Schedule. a. The same person is responsible for the appropriate accounting of each cash transaction done through him. However, recordation errors and theft may result in a variance from the initial funding amount. The entry for replenishment is: The Cash Over and Short account will be used to balance the entry when the cash needed to get back to the petty cash account does not match the total of petty cash vouchers. For petty cash accounting, you must create a log detailing your transactions. You should set boundaries before distributing petty cash. Select a petty cash custodi… Does your business provide petty cash to employees? When the petty cash fund gets too low, you must refill it to its set amount. The journal entry to record the replenishment of, and increase in the petty cash fund includes a credit to A. Multiple Choice . To fix discrepancies, reconcile your petty cash. This is a credit to the petty cash account, and probably debits to several different expense accounts, such as the office supplies account (depending upon what was purchased with the cash). Assume that the local bookstore determined that $100 cash should be kept on hand for miscellaneous expenses. 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