Popular Courses
COMM 217
Concordia University
ACCT 2301
The University of Texas at Dallas
Intro to Financial Accounting
General Course
COMM 293
University of British Columbia
Intro to Financial Accounting
University Study Guides
Intro to Financial Accounting
University Study Guides
ADMS 2500
York University
ACCTG 211
University of Alberta
BU127
Wilfrid Laurier University
AFM 101
University of Waterloo
BUS 251
Simon Fraser University
AFA 100
Toronto Metropolitan University
BUSINESS 3321K
Western University
COM 315
University of Victoria
ACCT 2301
Houston
ACCT 2301
Houston
ACCT-1510
University of Windsor
ADMN 1221H
Trent University
ACC 110
Toronto Metropolitan University
ACC 1100
University of Manitoba
0:00 / 0:00
Petty Cash
Petty cash is a system used by businesses that sometimes require employees to have access to small amounts of cash to make purchases where paying by check is not possible or it is impractical.
What is Petty Cash?
- Small amount of cash on hand
- Balanced periodically
- Used for small purchases
Establishing a Petty Cash Fund
- Transfer amount from Cash account to Petty Cash account
- Typically the amount transferred is enough to last about a month
0:00 / 0:00
Using and Replenishing the Petty Cash
Employees that are authorized can use the petty cash when needed, provided that they have a receipt describing the purchase.
Rules for Using Petty Cash
- Each payment must be accompanied by a receipt
- Receipts are kept in the same box as the petty cash until it is replenished
- Petty cash and receipts should total the amount of the established petty cash fund.
Replenishing the Fund
- Journalize each transactions from the receipts
- Transfer cash to petty cash to replenish balance
- Use Cash Over and Short when there are overages or shortages of cash
- This account is reported as a non-operating revenue or expense on the Income Statement
0:00 / 0:00
Example: Petty Cash
Prepare the following journal entries.
The manager of Ice Cream Heaven wishes to establish a petty cash fund for its employees to use in case of unexpected situations. On July 1st, a petty cash fund of $150 is established. At the end of the month, management opened the petty cash box and it contained the following:
- Cash: $120
- Receipts for purchases of supplies
- Purchase of 4 gallons of milk: $12
- Purchase of paper cups: $14
- Purchase of rolls of paper: $9
Prepare the journal entries required on July 1st and July 31st.
Journal entry to establish petty cash on July 1st
Journal entry to replenish petty cash on July 31st
Practice: Petty Cash
Prepare the necessary journal entries for ABC Inc.
Established a $100 petty cash fund on October 1st.
Transactions:
| Account | Debit | Credit |
|---|---|---|