section 2the petty cash fund what you’ll learn how a business establishes a petty cash fund. how...
TRANSCRIPT
Section 2 The Petty Cash Fund
Section 2 The Petty Cash FundWhat You’ll Learn
How a business establishes a petty cash fund.
How to prepare petty cash requisitions to replenish the petty cash fund.
How to use a petty cash register to record petty cash disbursements.
How to record the journal entry to replenish the petty cash fund.
How to determine whether petty cash is short or over and record the amount of the shortage or overage.
What You’ll Learn How a business establishes a petty
cash fund. How to prepare petty cash requisitions
to replenish the petty cash fund. How to use a petty cash register to
record petty cash disbursements. How to record the journal entry to
replenish the petty cash fund. How to determine whether petty cash
is short or over and record the amount of the shortage or overage.
Why It’s Important
Businesses use petty cash funds
because writing checks for small
amounts is impractical, costly, and time
consuming.
Why It’s Important
Businesses use petty cash funds
because writing checks for small
amounts is impractical, costly, and time
consuming.
Key Terms petty cash fund
petty cash disbursement
petty cashier
Key Terms petty cash fund
petty cash disbursement
petty cashier
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)
petty cash voucher
petty cash requisition
petty cash register
petty cash voucher
petty cash requisition
petty cash register
Establishing a Petty Cash FundEstablishing a Petty Cash Fund
Small, incidental cash payments
are made from the petty cash fund.
To establish a petty cash fund, a
business estimates the amount of
cash needed in the fund for a
certain period of time, usually a
month.
Small, incidental cash payments
are made from the petty cash fund.
To establish a petty cash fund, a
business estimates the amount of
cash needed in the fund for a
certain period of time, usually a
month.
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)
Journalizing the Establishment of the Petty Cash FundJournalizing the Establishment of the Petty Cash Fund
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)
Business Transaction
On May 1, Check 2151 for $100 was issued to establish the petty cash fund.
JOURNAL ENTRY
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)
Making Petty Cash Payments
Whenever a cash payment is made, a petty cash voucher is completed.
Making Petty Cash Payments
Whenever a cash payment is made, a petty cash voucher is completed.
Replenishing the Petty Cash FundReplenishing the Petty Cash Fund
When the amount of cash in the
petty cash box reaches the
minimum amount, the petty cash
fund is replenished.
Replenishing the petty cash fund
restores the fund to its original
cash balance.
When the amount of cash in the
petty cash box reaches the
minimum amount, the petty cash
fund is replenished.
Replenishing the petty cash fund
restores the fund to its original
cash balance.
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)
Reconciling the Petty Cash FundReconciling the Petty Cash Fund Add all the paid petty cash vouchers.
This total is then subtracted from the original cash balance of the petty cash fund.
The difference is the reconciled petty cash balance, or the amount of money that should be in the petty cash box.
Add all the paid petty cash vouchers.
This total is then subtracted from the original cash balance of the petty cash fund.
The difference is the reconciled petty cash balance, or the amount of money that should be in the petty cash box.
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)
Original balance $100.00
Total of paid petty cash vouchers – 87.75
Reconciled petty cash balance $ 12.25
Original balance $100.00
Total of paid petty cash vouchers – 87.75
Reconciled petty cash balance $ 12.25
Preparing a Petty Cash Requisition FormPreparing a Petty Cash Requisition Form
After the petty cash fund is reconciled, the petty cashier prepares a petty cash requisition.
A petty cash requisition is a form requesting money to replenish the petty cash fund.
After the petty cash fund is reconciled, the petty cashier prepares a petty cash requisition.
A petty cash requisition is a form requesting money to replenish the petty cash fund.
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)
Using a Petty Cash RegisterUsing a Petty Cash Register
A supplemental record that
summarizes the types of petty
cash disbursements.
It is not an accounting journal
because amounts from this
register are not posted to
general ledger accounts.
A supplemental record that
summarizes the types of petty
cash disbursements.
It is not an accounting journal
because amounts from this
register are not posted to
general ledger accounts.
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)
Check Your UnderstandingCheck Your Understanding
How do you determine if
a petty cash fund is short or
over?
How do you determine if
a petty cash fund is short or
over?
Section 2 The Petty Cash Fund (cont'd.)Section 2 The Petty Cash Fund (cont'd.)