COLLEGE OF BUSINESS AND ACCOUNTANCY

Topic: IMPREST SYSTEM: Petty Cash Fund

How is Petty Cash Transaction Controlled and Reported?

As control measures of petty cash fund, the procedures are widely used:

 One person is usually given the responsibility of operating the petty cash fund
 Each time an expenditure is made, a source document (called a petty cash voucher) is prepared for
payment evidence. The voucher is signed by the person receiving the cash and by the person in
charge of the fund (petty cashier). The petty cash voucher includes the amount and purpose of the
expenditure.
 A record (usually multi columned) is kept to record each expenditure from the petty cash fund
 Each time the fund is almost depleted and also at the end of every accounting period, a check is
prepared for the amount spent and cashed to replenish the petty cash fund.

PETTY CASH RECEIPT

No. 121 Date August 1, 2001
Paid to Metropolitan Times Amount: 300

For Daily Newspaper

Charge to Miscellaneous Administrative Expense
Payment received:
S.O. Hall Approve by N.E.R

No Description Journal Entry

1 Petty Cash xxx
An establishment of petty cash fund
Cash xxx
2 Payment expenses by the petty cash custodian No Entry
3 Receiving disbursement evidences and replenished Kinds of Expenses xxx
petty cash Cash xxx
4 Petty cash funds are too small and needed to increase Petty Cash Xxx
petty cash fund balance Cash xxx
5 Petty cash funds are too much and needed to decrease Cash xxx
petty cash fund balance Petty Cash xxx

5 At the end of period, to make an adjusting entry (If there Kinds of Expenses xxx
are unrecorded transactions) Petty Cash xxx
6 At the beginning of next period, the reversing entries is Petty cash xxx
developed Kinds of Expenses xxx
ILLUSTRATION:

Date Description Journal Entry

Airlangga, Corp established petty Petty Cash 10,000,000
March 1,2021
cash funds Rp. 10,000,000 Cash 10,000,000
The petty cash receipts indicate
expenditures for the following items:
• Office supplies Rp.
5,000,000
• Postage expenses Rp.
No Entries
500,000
• Utility expenses Rp.
March 14, 2021 3,000,000
• Miscellaneous expenses Rp.
300,000
Office supplies 5,000,000
Postage expenses 500,000
Utility expenses 3,000,000
Replenished petty cash funds
Miscellaneous expenses 300,000
March 15, 2021
Cash 8,800,000
Petty cash funds are too small and Petty Cash 2,500,000
March 16, 2021 needed to increase petty cash fund
balance, Rp. 2,500,000 Cash 2,500,000
At the end of period, the Adjusting Entry
expenditures are unrecorded for the
following items: Postage expenses 300,000
 Postage expenses Rp. Utility expenses 1,200,000
300,000
 Utility expenses Rp. Miscellaneous expenses 100,000
1,200,000
 Miscellaneous expenses Rp. Petty Cash 1,600,000
100,000
Reversing Entry
Petty Cash 1,600,000
At the beginning of the next period,
April 1, 2021 Postage expenses 300,000
the reversing entries to be made
Utility expenses 1,200,000
Miscellaneous Exp. 100,000

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Reference: Valix, C. T., Peralta, Jose F., Valix, C A M. (2015). Financial Accounting Volume 1