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    Petty Cash

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    Mahedi
    Petty cash is a small amount of cash kept on hand to pay for minor business expenses. To establish a petty cash fund, a business cashes a check and places the cash in a petty cash drawer. Expenses are paid from the petty cash and vouchers are signed by the recipient and controller. When the fund needs replenishing, the vouchers are totaled and a check is cashed to bring the fund back to its original balance. Journal entries debit expense accounts and credit cash to record replenishing the petty cash fund.

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    Petty Cash

    Uploaded by

    Mahedi
    35 views4 pages
    Petty cash is a small amount of cash kept on hand to pay for minor business expenses. To establish a petty cash fund, a business cashes a check and places the cash in a petty cash drawer. Expenses are paid from the petty cash and vouchers are signed by the recipient and controller. When the fund needs replenishing, the vouchers are totaled and a check is cashed to bring the fund back to its original balance. Journal entries debit expense accounts and credit cash to record replenishing the petty cash fund.

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    Petty cash is a small amount of cash kept on hand to pay for minor business expenses. To establish a petty cash fund, a business cashes a check and places the cash in a petty cash drawer. Expenses are paid from the petty cash and vouchers are signed by the recipient and controller. When the fund needs replenishing, the vouchers are totaled and a check is cashed to bring the fund back to its original balance. Journal entries debit expense accounts and credit cash to record replenishing the petty cash fund.

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    © All Rights Reserved
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    35 views4 pages

    Petty Cash

    Uploaded by

    Mahedi
    Petty cash is a small amount of cash kept on hand to pay for minor business expenses. To establish a petty cash fund, a business cashes a check and places the cash in a petty cash drawer. Expenses are paid from the petty cash and vouchers are signed by the recipient and controller. When the fund needs replenishing, the vouchers are totaled and a check is cashed to bring the fund back to its original balance. Journal entries debit expense accounts and credit cash to record replenishing the petty cash fund.

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    of 4

    3/29/2014

    Petty Cash Cash


    Cash is one of the
    Presented By
    most important
    Md. Mahedi Hasan assets a business
    BBA (DU), CA Advanced Stage (ICAB owns. Cash is the
    under ICAEW Syllabus)
    Deputy Manager (A&C), ACNABIN, primary asset used
    Chartered Accountants to acquire other
    assets as well as to
    pay for operating
    expenses.

    Internal Control for Cash Petty Cash


    Because Cash is a highly Another internal control is to keep as little
    desirable asset and cash on hand as possible. It is often necessary,
    is readily transferable, however, to keep some cash on hand.
    internal control over
    Cash kept on hand at a business to pay for
    cash is especially
    small items such as postage due, a birthday
    important.
    card, or fuel expenses is known as Petty Cash.

    1
    3/29/2014

    Establishing A Petty Cash Fund


    Petty Cash
    A Petty Cash fund is established by cashing a
    Petty Cash is generally kept in a petty cash check for the amount determined to be
    drawer and payments are made for included in the Petty Cash fund. This amount
    miscellaneous items out of this cash. varies by company and may be as small as $25
    or as large as $500 depending on the
    company’s needs.

    Journal Entry for Establishing A


    Internal Control Over Petty Cash
    Petty Cash Fund
    Assume that JCC has determined that $125 cash Petty Cash is paid out in exchange for a petty
    should be kept on hand for miscellaneous expenses. cash voucher signed by both the recipient of
    A check will be written on JCC’s checking account the cash and the petty cash controller. The
    and JCC will put $125 cash in a Petty Cash drawer. voucher should indicate the amount of cash
    The following journal entry should be recorded for paid out and the purpose of the disbursement.
    this transaction. The recipient of the cash should provide a
    Petty Cash 125 receipt for the purchase made out of petty cash
    Cash 125 which will be attached to the
    Established Petty Cash Fund petty cash voucher.

    2
    3/29/2014

    Replenishing Petty Cash: An Example


    Replenishing Petty Cash ●The cash in the Petty Cash Voucher Fuel Exp
    Amount $23.00
    Petty Cash Drawer is Charge to Fuel Expense Totals $61
    At some point the Petty Cash fund must be replenished. It counted. Petty Cash Voucher
    is at this point that the petty cash fund will also be Amount $38.00
    reconciled. Charge to Fuel Expense
    Petty Cash Voucher
    Amount $15.00 Office
    The procedure to replenish and reconcile petty cash $18 Charge to Off Supplies Supplies
    begins by counting the cash remaining in the Petty Cash Petty Cash Voucher Total $24
    drawer. Next, all vouchers are totaled. The combined Amount $9.00
    Charge to Off Supplies
    total of remaining cash and Petty Cash Vouchers should ●The Petty Cash
    Petty Cash Voucher Misc Expense
    equal the established value of the Petty Cash fund. Vouchers are organized Amount $22.00 Totals $22
    and totaled. Charge to Misc Expense
    Finally, the Petty Cash vouchers should be organized into
    All Vouchers Total $107
    expense categories.

    Replenishing Petty Cash: An Example Replenishing Petty Cash: An Example

    ●Add the total of the cash in the Petty Cash Drawer to the ●The Petty Cash Fund must be replenished by cashing a
    total of all Petty Cash Vouchers. check to bring the drawer up to the originally funded amount.
    $18 + $107 = $125. The Petty Cash fund for JCC was originally funded for $125.
    A count of the cash in the Petty Cash drawer revealed $18.
    ●Compare the total of all items in the Petty Cash drawer to
    Cash of $107 must be added to the Petty Cash drawer to
    the amount for which Petty Cash was established.
    replenish the fund.
    ●A journal entry is required to record the transaction to
    Petty Cash Fund Original Balance: $125
    replenish the Petty Cash fund.

    3
    3/29/2014

    Replenishing Petty Cash: Journal Entry


    ●When journalizing the entry to replenish Petty Cash, you This Concludes
    will debit the items for which Petty Cash was withdrawn and
    credit Cash. The Presentation on
    ●Recall the Petty Cash Vouchers that were previously
    organized and totaled. These vouchers provide the numbers Petty Cash and
    used in the debit portion of this entry.
    ●The Cash shortage must also be addressed with this entry.
    Fuel Expense 61
    Office Supplies 24
    Miscellaneous Expense 22
    Cash 107

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