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Chapter 5-Petty Cash Book 2023

1. Maitreyi keeps a petty cash book using the imprest system with a fixed amount of $150. 2. The petty cash book is analyzed to record expenses in categories like stationery, postage, travel etc. Vouchers are issued for each expense. 3. At the end of the period, columns are totaled and double entry is passed by debiting expense accounts and crediting the petty cash book to replenish the fund.

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Joshua Ruiz
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123 views54 pages

Chapter 5-Petty Cash Book 2023

1. Maitreyi keeps a petty cash book using the imprest system with a fixed amount of $150. 2. The petty cash book is analyzed to record expenses in categories like stationery, postage, travel etc. Vouchers are issued for each expense. 3. At the end of the period, columns are totaled and double entry is passed by debiting expense accounts and crediting the petty cash book to replenish the fund.

Uploaded by

Joshua Ruiz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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PETTY CASH BOOK

Is used to record low-value (petty) cash


payments.

Include postages, stationery, cleaning,


traveling expenses, and even small cash
payments to creditors
Purposes of Petty cash book

It lists of transactions for transferring to


ledger accounts

It also acts as a ledger account for petty cash


transactions.
Notes to
remember
Petty cash book is a book of
prime entry; and
it is part of the double entry
system, it is also a ledger
account.
Maintaining a petty cash book
means that it is not necessary
to record small cash payments
individually in either the cash
book or the ledger.
This reduces the number of
entries in these books.
Petty cash voucher

❑ a document used when staff wishes to


obtain some petty cash and present to
the petty cashier.

❑ At regular intervals the petty cashier


should check these vouchers against
the total cash spent.
Petty Cash Voucher
A petty cash voucher is a form used to document a disbursement (payment) from a petty cash fund.
Petty cash vouchers are used as part of a petty cash system to keep track of all disbursements,
ensuring that there is a paper trail for all petty cash transactions.

A petty cash voucher typically includes the following information:

● Date: The date when the petty cash was disbursed.


● Amount: The amount of money that was disbursed.
● Recipient: The name of the person who received the money.
● Purpose: A brief description of the reason for the disbursement.
● Approved by: The name of the person (often the petty cash custodian) who approved or
made the disbursement.
● Signature: The signature of the person who received the cash.

Whenever money is taken out of the petty cash fund, the recipient fills out a petty cash voucher. If the
recipient receives a receipt for their purchase, that receipt is typically attached to the voucher. This helps
keep a record of all transactions and aids in the accountability and control of the fund. When the petty
cash fund is replenished, the vouchers are used to account for the disbursements and to record them in
the company’s general ledger.
Petty cash vouchers are used to record small, day-to-day expenses in a business or organization. Here are
some example activities for which you might use a petty cash voucher:

1. Office Supplies: Purchasing pens, paper, or other small stationery items for the office.
2. Refreshments: Buying snacks, coffee, or beverages for office meetings or events.
3. Postage: Paying for postage stamps or shipping costs for small packages.
4. Transportation: Reimbursing employees for parking fees, tolls, or public transportation expenses
related to work.
5. Repairs and Maintenance: Covering minor maintenance or repair costs, such as fixing a broken office
chair.
6. Office Cleaning Supplies: Purchasing cleaning products or supplies for maintaining a clean
workspace.
7. Petty Gifts: Buying small gifts or tokens for employees or clients.
8. Meal Expenses: Paying for meals during business-related activities, like when hosting a client for
lunch.
9. Miscellaneous Expenses: Any other small, miscellaneous costs that arise in the course of business
operations.
Petty cash voucher should
include

❑ The purpose for which the


money is required
❑ The date and the signature of
the person receiving the cash
The Imprest System

❑ This system where petty cashier starts each


period (week, fortnight, month etc) with a
fixed amount of money, At the end of the
period the chief cashier will make up or
reimburse the cash remaining so that each
month starts off with the same amount .
❑ This is known as the imprest amount or the float.
❑ During the period, payments are made
out of this cash and are recorded in
balance in the petty cash book.
❑ Under this system the chief cashier is
aware of exactly how much petty cash
has been spent in each period

❑ The amount of the imprest can be


adjusted as necessary if it is too much or
enough.
The lay-out of a Petty Cash Book

Resembles a ledger account with several money


columns on the credit side.
Analysis columns
❑ Are used to divide the payments into different
categories.
❑ A column is used for each of the main types
of expenses paid out of petty cash.
• Instead of a folio column in the credit side
there is a column for recording the number of
the voucher to which the payment relates.
Preparation of a Petty Cash Book
During the period
1.Money received

(a) debit the total received column with money


received from the chief cashier.
Insert the word ‘cash’ or bank in the details column

20-9
Jan 1 Bank/ $150
cash
Preparation of a Petty Cash Book
During the period
1.Money received

(a) debit the total received column with money


received from the chief cashier.
Insert the word ‘cash’ or bank in the details column

20-9
Jan 1 Bank/ $150
cash
Maitreyi keeps an analyzed petty cash book using the imprest
system. The amount of the imprest is $150 she provide the following
information

20-1 $ Voucher #
November 1 Balance 150

20-1
Nov 1 Balance/bd $150
b. Debit the total received column with any
amount received from any other source

Insert the name of the account to be credited in the


details column

Ex.
❑ Name of a debtor
❑ Travel expenses refund (reimbursement)
❑ Telephone expenses (reimbursement)
Money is paid
⚫ Credit the total paid column with any
money paid out and also enter the amount
in the analysis column for that particular
expense
A brief description of the reason for the
payment should be entered in the details
column.
Voucher # 1
2001 November 5

5 Paid window cleaner 10 1

Paid window cleaner $ 10


Voucher # 1
November 5

5 Paid window cleaner 10 1

Paid window cleaner $ 10


Voucher # 2
November 8

5 Paid window cleaner 10 1

Bought pens and pencils $ 4


Voucher # 2
November 8

Bought pens
5 Paid window cleaner 10 1
and pencils $ 4

Bank
Voucher # 3
November 14

Paid H Singh, a creditor $20


Voucher # 3
November 14

Paid H Singh, a creditor $20

Bank
Voucher # 4
November 17

Paid taxi fare $9


Voucher # 4
November 17

Paid taxi fare $9

Bank
Voucher # 5
November 21

Bought computer
paper $7
Voucher # 5
November 21

Bought computer paper $7

Bank
Voucher # 6
November 25

Paid bus fare $3


Voucher # 6
November 25

Paid bus fare


$3

Bank
Voucher # 7
November 27

Paid A Sharma, a creditor $32


Voucher # 7
November 27

Paid A Sharma, a creditor $32

Bank
Voucher # 8
November 29

Paid office cleaner $30


Voucher # 8
November 29

Paid office cleaner $30


At the end of the period
• Add the total paid column. Insert the total
At the end of the period
• Add the total paid column. Insert the total

/Bank
• Add each of the analysis columns and insert the totals

If these totals are then added horizontally they should agree with
total paid column. The analysis columns are now complete.
Balance the total received column and the total paid
column in the same way as balancing any other ledger
account.

Carry down the balance from the credit side to the debit
side to start the new period
‘rrr

Complete the double entry for the totals of the


analysis columns.
The total of the analysis columns for expenses should be
debited to the appropriate expense account in the nominal
ledger.
PCB1
PCB1
Any entries in the analysis
column headed ledger
accounts should be debited
individually to the purchase
ledger account of the creditor
who made the payment.
Postage & Stationery account

Date Details F $ Date Details F $


2007 2007
30 Sept Petty PCB 87 30 Sept Petty Cash PCB 6
Cash
To indicate that the double entry has been
complete the folio number of the relevant
account is often written below the total of the
appropriate analysis column in the petty cash
book.

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