Batangas State University

Pablo Borbon Campus

The National Engineering University

LEARNING MODULE
IN
ACC 205

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University

Petty Cash and Accounting

for Cash and Cash Overage

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University

OBJECTIVES
1. Define imprest system and its application.
2. Explain accounting for petty cash under imprest system.
3. Describe the accounting considerations for cash
overage/cash shortage
4. Solve problems involving petty cash.

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
Imprest System The National Engineering University

- A system of cash control which requires all cash receipts should be deposited intact and all
cash disbursements should be made by means of check. An internal control of cash to
avoid theft and misappropriation.

Under the imprest system, all collections should be DEPOSIT in BANK.

Under the imprest system, all payments should be MADE by CHECKS except PETTY
EXPENSES

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University

Petty Cash Fund (PCF)

It is impractical for the company to make all payments thru check.
Therefore, a petty cash fund is established to cover small and
miscellaneous expenditures.

Petty Cash Fund (PCF) is money set aside to defray relatively small
amounts of cash disbursements.

The company should designate a Petty Cash Custodian. He/She should

prepare a petty cash voucher for the company to established the PCF.

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University
Accounting for Cash
Shortage or Overage
Shortage – Cash count is < balance per book Overage – Cash counts is > balance per book

Cash Short/Over xxx Cash xxx

Cash xxx Cash Short/Over xxx

If chargeable to custodian If found as money of the custodian

Due from cashier xxx Cash Short/Over xxx
Cash xxx Payable to custodian xxx
No cause identified No claim
Loss from cash shortage xxx Cash Short/Over xxx
Cash xxx Miscellaneous Income xxx

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University

Illustration
2022
Nov 10 The entity established an imprest fund of P10,000
Petty cash fund 10,000
Cash in Bank 10,000
Nov 20 Replenished the fund. The petty cash items include:
Currency and coins 2,000
Supplies 5,000
Telephone 1,800
Postage 1,200
Nov 20 The journal entry to record the replenishment is:
Supplies 5,000
Telephone 1,800
Postage 1,200
Cash in Bank 8,000

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University
Illustration
Dec 31 The fund was not replenished
The fund is composed of the following currency and coin P7,000, supplies P1,500, postage
P500, miscellaneous expense P1,000
Supplies 1,500
Postage 500
Miscellaneous Exp 1,000
Petty cash fund 3,000
2023
Jan 1 The adjustments made on December 31, 2022 is reversed
Petty cash fund 3,000
Supplies 1,500
Postage 500
Miscellaneous exp 1,500

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University
Illustration
2023 Feb 1 The fund is replenished and increased to P15,000
The composition of the fund
Currency and coin 1,000
Supplies 4,500
Postage 3,000
Miscellaneous exp 1,500
Total 10,000
Entries
Petty Cash Fund 5,000
Cash in Bank 5,000

Supplies 4,500
Postage 3,000
Miscellaneous Exp 1,500
Cash in Bank 9,000

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University

Leading Innovations, Transforming Lives,

Building the Nation
 Batangas State University
Pablo Borbon Campus
The National Engineering University

Leading Innovations, Transforming Lives,

Building the Nation