The procedure for petty cash funding is outlined below:
- Complete reconciliation form. Complete a petty cash reconciliation form, in which the petty cash custodian lists the remaining cash on hand, vouchers issued, and any overage or underage.
- Obtain cash.
- Add cash to petty cash fund.
- Record vouchers in general ledger.
What is appropriate to purchase with petty cash?
A petty cash fund can be used for office supplies, cards for customers, flowers, paying for a catered lunch for employees, or reimbursing employees for expenses.
Is there a limit on petty cash?
That depends on how many small expenses you make and how often you make them, but most businesses seem fine carrying between $100 and $200 in petty cash. Use your judgement, and put less into the petty cash fund than you think you need—you can always increase the amount later.
What’s the total amount of petty cash on hand?
In this case, the cash needed to get back to $100 ($100 fund – $7.40 petty cash on hand) of $92.60 equals the total of the petty cash vouchers. But, that is not always the case. Sometimes, the petty cash custodian makes errors in making change from the fund or doesn’t receive correct amounts back from users.
What happens when Petty Cash is disbursed?
The petty cash custodian then disburses petty cash from the fund in exchange for receipts related to whatever the expenditure may be. There is no journal entry at this point; instead, the cash balance in the petty cash fund continues to decline, while the number of receipts continues to increase.
What are the journal entries for petty cash?
The petty cash journal entry is a debit to the petty cash account and a credit to the cash account. The petty cash custodian refills the petty cash drawer or box, which should now contain the original amount of cash that was designated for the fund. The cashier creates a journal entry to record the petty cash receipts.
Who is responsible for petty cash and ACCT no?
ACCT NO. The custodian should prepare a voucher for each disbursement and staple any source documents (invoices, receipts, etc.) for expenditures to the petty cash voucher. At all times, the employee responsible for petty cash is accountable for having cash and petty cash vouchers equal to the total amount of the fund.
