What is petty cash book ? As the cash book lists bank payments & receipts, a petty cash book is needed to record actual cash transactions.
Voucher Voucher is a form which shows what a payment is for .
Imprest system Imprest systems is a system by which a refund is made of the total paid out in a period.
A worked example of a petty cash book: Step 1 Enter date and details of each payment .Put in the total column. Step 2 For step 1 also put the amount in the column for the type of expense. Step 3 At the end of each period,add up the totals column Step 4 Now add up each of the expense columns. The total of Step 3 should equal the total of all the expense column Step 5 Then balance off the petty cash book ,carrying down the petty cash in hand balance to the next period
For example: Write up a petty cash book,with analysis columns for office expenses,motor expenses ,cleaning expenses and casual labour.The cash float brought down is $600 and the amount spent is reimbursed on 28 Feb.Show the balance carried down to 1 March . Year 8 $ Feb 1 Letterheadings 32 2 F.Lee-casual labour 15 2 Unique Motors- motor repairs 33 4 Petrol 27 5 Paper clips 10 8 Envelopes 12 9 Cleaning materials 15 11 C.Hop- casual labour 27 13 Mr.Ng-cleaner 21 16 Typewriter ribbons 24 18 Motor taxation 60 21 K.Kwan - casual labour 20 Also show how the items for motor expenses and office expenses would appear in the general ledger.
General Ledger Motor Expenses Year 8 $ Feb 28 Petty cash 120 Office expenses Year 8 $ Feb 28 Petty cash 78
Now you know how to prepare a petty cash book ??? Let's try try !!!!
Exercise Year 3 May 1 The cashier hands a cheque for$100 to the petty cashier to enable him to obtain cash for the starting float of petty cash $ 3 Stationery Voucher No. 1 5.6 5 Postage Voucher No. 2 8.7 8 Cleaning expenses Voucher No. 3 15.2 12 Payment of amount to K Sutton in the purchases ledger Voucher No. 4 27.4 17 Postage Voucher No. 5 6.3 20 S-Small- travel exp. Voucher No. 6 4.5 23 Stationery Voucher No. 7 3.2 25 Cleaning expenses Voucher No. 8 12.4 27 Telephone phone bill Voucher No.9 1.2 29 Postage Voucher No. 10 6.3 31 The cashier reimburses the petty cashier the amountpaid out to date
General Ledger Postage Year 3 $ May 31 Petty cash 21.3 Stationery Year 3 $ May 31 petty cash 8.8 Travel Exp. Year 3 $ May 31 Petty Cash 4.5 Cleaning Year 3 $ May 31 Petty Cash 27.6
General Ledger Bank Year 3 $ May 1 Petty Cash 100 Jun 1 Petty Cash 88.6 K Sutton Year 3 $ May 31 Petty Cash 27.4 Purchases Ledger
Revision Notes • The petty cash book saves 1) the main cash book 2)the ledger accounts from containing a lot of trivial details • The use of the petty cash book enables the chief cashier to delegate this type of work to a more junior member of staff • Under the imprest system,at the end of a period ,the cashier reimburses the petty cashier the amount spent in the that period ,so as to make up the cash float.