4 Petty Cash Book

TR DEO
What is Petty Cash Book?

◼ Petty cash book is used to record low- value

cash payments.
◼ Eg. Postages and stationery, cleansing,
travelling expense and even small cash
payments to creditors.
 Reasons

◼ Lists the transactions for the transferring to ledger accounts

◼ It acts as a ledger account for petty cash transactions
stationary ($ 50)
Head Cashier
$500 Petty Cashier
bus fare($5)
snack( $30)
Maintaining the general responsible for managing
$415Money left
cash book and managing the expenses. small day-to-day cash payment
85
Refill the amount until $500 in
every week $500
5.2 The imprest system

◼ Petty Cash Imprest Amount is the amount of Cash the Petty Cashier
should start each month with.

◼ Every fixed amount of money is given to petty cashier in beginning.

◼ Petty cashier spent during the period
◼ In the end details are submitted to Head Cashier.
◼ Head cashier refill the amount spent.
5.3 The layout of a petty cash book

◼ A ledger account with several money columns with different categories

on the credit side are called analysis columns.
◼ A column is used for each of main types of expense paid out by petty
cash.
Formula
5.4 Preparation of a petty cash book

◼ During the period,

◼ Money received,
◼ Total received column in petty cash book Dr
◼ By Cash book Cr
◼ Money paid,
◼ Specific expense account Dr
◼ Total paid column in petty cash book Cr
Walkthrough 5.1
◼ Maitreyi keeps an analysed petty cash book using the imprest system. The amount of the imprest is $150. She provided
the following information:
◼ 20–1 $ Voucher number
◼ November 1 Balance 150
◼ 5 Paid window cleaner 10 1
◼ 8 Bought pens and pencils 4 2
◼ 14 Paid H Singh, a credit supplier 20 3
◼ 17 Paid taxi fare 9 4
◼ 21 Bought computer paper 7 5
◼ 25 Paid bus fares 3 6
◼ 27 Paid A Sharma, a credit supplier 32 7
◼ 29 Paid office cleaner 30 8
a Write up Maitreyi’s petty cash book for the month of November 20–1. The petty cash book should have four analysis
columns – cleaning, stationery, travel expenses and ledger accounts.
b Balance the petty cash book on 30 November and carry down the balance. Show the restoration of the imprest on 1
December 20–1.
c Make the necessary entries in Maitreyi’s nominal ledger and purchases ledger on 30 November 20–1