The most common way of accounting for petty cash expenditures is to use the imprest system. The size of the fund depends on the firm’s needs but should be large enough to last at least three to four weeks. Enter Advance entry with special GL as advance. A petty cash fund is a small fund whose purpose is to make small disbursements of cash. Under imprest, petty cash book system petty cashier submits a statement of expenditure to the head cashier at an interval of a certain period and thereafter receives funds from him for further expenses. See the Petty Cash Policy for additional details. You can also mandate that all petty cash transactions be under a certain dollar amount, like $25. The initial cash as a petty cash run rarely goes to 0. Otherwise, leave the payee field blank. A petty cash account is simply money kept on hand to pay for minor cash items such as stamps, office supplies, tips, parking tolls, etc. Create Advance to Employees for Petty cash GL whcih same created as Recon account ( Vendor) 4. It's not necessary to record a payee, though you can if you want. The cash over and short account is an excellent tool for tracking down fraud situations, especially when tracked at the sub-account level for specific cash registers, petty cash boxes, and so forth. You just need to compare any receipts out of petty cash with the transactions you made under the ‘Spend Money’ function. The head cashier before funding again examines the … 2. The purpose of a petty cash fund is to provide business units with sufficient cash to cover minor expenditures. 5. Petty cash log. The transaction that replenishes the petty cash fund is recorded with a compound entry that debits all relevant asset or expense accounts and credits cash. If you already have money to use for petty cash, enter the amount in the Balance field and choose the as of date. The opening balance will be created when you move money from the checking account by writing a check or transferring funds. Petty cash or the petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check. Petty cash balance after reimbursement reverts to back to the level of the float. An examination of the account at this level of detail may show an ongoing pattern of low-level cash theft, which management can act upon. For example, petty cash may be used to purchase additional postage, paper towels, coffee, or other basic office supplies. Entry as follows It is easy to set up and will save you from writing a lot of small checks or using your personal funds. The petty cash amount may appear as the first or second item listed in the current asset section of the balance sheet. Under Explanation of Deposit, indicate "close petty cash fund # 82XXX" Deposit the cash and any un-cashed replenishment checks at Wells Fargo Bank, 2nd floor, Tresidder Memorial Union: If all the petty cash was spent on one payee, you can enter a payee name like "Ralph's Office Supply" or "Starbucks Coffee" if you'd like. Read on to learn about establishing a petty cash fund, handling petty cash accounting, reconciling your petty cash account, and claiming a tax deduction.
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