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    PPT2.1-2 Accounting For Petty Cash Fund (2020)

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    Alyson Fortuna
    The document discusses accounting for petty cash funds using the imprest system. It defines a petty cash fund as a small amount of cash set aside to pay minor expenses. Under the imprest system, the petty cash balance remains constant as disbursements are made from the fund and replenished through a check. The document provides an example journal entries for petty cash transactions under the imprest system and the process for adjusting the petty cash balance at the end of each period.

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    PPT2.1-2 Accounting For Petty Cash Fund (2020)

    Uploaded by

    Alyson Fortuna
    687 views25 pages
    The document discusses accounting for petty cash funds using the imprest system. It defines a petty cash fund as a small amount of cash set aside to pay minor expenses. Under the imprest system, the petty cash balance remains constant as disbursements are made from the fund and replenished through a check. The document provides an example journal entries for petty cash transactions under the imprest system and the process for adjusting the petty cash balance at the end of each period.

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    PPT2.1-2 Accounting for Petty Cash Fund (2020)

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    The document discusses accounting for petty cash funds using the imprest system. It defines a petty cash fund as a small amount of cash set aside to pay minor expenses. Under the imprest system, the petty cash balance remains constant as disbursements are made from the fund and replenished through a check. The document provides an example journal entries for petty cash transactions under the imprest system and the process for adjusting the petty cash balance at the end of each period.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    687 views25 pages

    PPT2.1-2 Accounting For Petty Cash Fund (2020)

    Uploaded by

    Alyson Fortuna
    The document discusses accounting for petty cash funds using the imprest system. It defines a petty cash fund as a small amount of cash set aside to pay minor expenses. Under the imprest system, the petty cash balance remains constant as disbursements are made from the fund and replenished through a check. The document provides an example journal entries for petty cash transactions under the imprest system and the process for adjusting the petty cash balance at the end of each period.

    Copyright:

    © All Rights Reserved
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    of 25

    Accounting for

    Petty Cash
    Fund
    MODULE 1 – PPT2.02
    Prepared by
    John John J. Dorega, CPA, MBA, LPT
    Topics
    1. What is Petty Cash Fund?
    2. Imprest Fund System of PFC
    3. Computation of PCF Shortages or
    Overages
    What is PETTY CASH FUND?
    What is PETTY CASH FUND?
    A fund set aside to pay small or petty expenses which cannot be paid
    conveniently by means of check.

    Transactions involves for Petty Cash Fund are as follows:


    1. Establishment of petty cash fund
    2. Disbursement from petty cash fund
    3. Replenishment of petty cash fund
    4. Adjusting entry at the end of the reporting period
    5. Increase or decrease in petty cash fund
    What is PETTY CASH FUND?
    Two methods of accounting for petty cash fund:
    1. Imprest fund system
    • The one usually followed in handling petty cash fund transactions.
    • During replenishment, a check is drawn equal to petty cash
    disbursements.
    • Before and after replenishment, the petty cash fund balance remains the
    same (imprest fund balance).

    2. Fluctuating fund system


    • When check is drawn to replenish the fund, the check amount may either
    be equal to previous petty cash amount as established, or will be
    increased or decreased depending upon the request of the petty cashier.
    What is PETTY CASH FUND?
    IN – CHARGE OF PETTY CASH FUND
    The petty cash fund is being kept by the PETTY CASH CUSTODIAN or
    PETTY CASHIER who has the following responsibilities:
    1. Keep the petty cash fund in a lock box in which he/she is the only
    person in charge of keeping its only key.
    2. Maintain a petty cash book.
    3. Disburse the small expenses from the fund supported by
    approved Petty Cash Vouchers (PCVs) and Expense Receipts.
    4. Replenish the petty cash fund when the fund runs low.
    5. Always keep the physical count of petty cash fund equal to petty
    cash balance in the petty cash book.
    PETTY CASH BOOK
    Petty Cash Fund Payment Distribution
    Date Transactions PCV No. Receipt Payment Balance Supplies Repairs Transp.

    2020
    12/1 Establishment 3,000 3,000
    12/2 Postage stamps 001 200 2,800 200
    12/3 Repairs 002 500 2,300 500
    12/4 Transportation 003 100 2,200 100
    PETTY CASH VOUCHER
    IMPREST FUND SYSTEM OF PCF
    IMPREST FUND SYSTEM
    Let us record the following petty cash fund transactions of Color
    Company during December 2020.
    TRANSACTIONS JOURNAL ENTRIES
    2020
    Dec. 18 Establishment of PCF, P 1,000 Petty Cash Fund 1,000
    Cash in Bank 1,000
    IMPREST FUND SYSTEM
    Let us record the following petty cash fund transactions of Color
    Company during December 2020.
    TRANSACTIONS JOURNAL ENTRIES
    2020
    Dec. 18 Establishment of PCF, P 1,000 Petty Cash Fund 1,000
    Cash in Bank 1,000

    19 PCV No. 1 – Postage stamps, P 350 No Entry


    Record only the
    20 PCV No. 2 – Repairs, P 200 No Entry disbursements in
    21 PCV No. 3 – Miscellaneous, P 150 No Entry the Petty Cash
    23 PCV No. 4 – Office Supplies, P 200 No Entry Book.
    IMPREST FUND SYSTEM
    TRANSACTIONS JOURNAL ENTRIES
    2020
    Dec. 23 Replenishment of PCF. Petty Cash Supplies (350 + 200) 550
    fund per count is P 100. Repairs Expense 200
    Miscellaneous Expense 150
    Cash in Bank 900
    IMPREST FUND SYSTEM
    TRANSACTIONS JOURNAL ENTRIES
    2020
    Dec. 23 Replenishment of PCF. Petty Cash Supplies (350 + 200) 550
    fund per count is P 100. Repairs Expense 200
    Miscellaneous Expense 150
    Cash in Bank 900

    26 PCV No. 5 – Supplies, P 250 No Entry Record only the disbursements


    28 PCV No. 6 – Transportation, P 100 No Entry in the Petty Cash Book.
    IMPREST FUND SYSTEM
    TRANSACTIONS JOURNAL ENTRIES
    2020
    Dec. 23 Replenishment of PCF. Petty Cash Supplies (350 + 200) 550
    fund per count is P 100. Repairs Expense 200
    Miscellaneous Expense 150
    Cash in Bank 900

    26 PCV No. 5 – Supplies, P 250


    28 PCV No. 6 – Transportation, P 100

    31 Adjusting entry for financial Supplies 250


    statement reporting purposes.
    Transportation Expense 100
    Petty Cash Fund 350
    IMPREST FUND SYSTEM
    TRANSACTIONS JOURNAL ENTRIES
    2020
    Dec. 31 Adjusting entry for financial Supplies 250
    statement reporting purposes.
    Transportation Expense 100
    Petty Cash Fund 350

    At December 31, 2020, the Petty Cash Fund balance to be reported in the Statement of
    Financial position is P 650.

    Date Transactions Petty Cash Fund


    Dr. Cr. Balance To
    12/18/2020 Establishment 1,000 Statement
    12/31/2020 Adjustment 350 650
    of Financial
    Position
    IMPREST FUND SYSTEM
    TRANSACTIONS JOURNAL ENTRIES
    2021
    Jan. 1 Reversing the petty cash fund Petty Cash Fund 350
    adjusting journal entry on 12/31 Supplies 250
    Transportation Expense 100

    Petty Cash Fund Supplies Transp. Expense


    (Beg) 650 (RJE) 250 (RJE) 100
    (RJE) 350

    (Bal.) 1,000
    IMPREST FUND SYSTEM
    TRANSACTIONS JOURNAL ENTRIES
    2021
    Jan. 1 Reversing the petty cash fund Petty Cash Fund 350
    adjusting journal entry on 12/31 Supplies 250
    Transportation Expense 100

    4 PCV No. 7 - Supplies, P 350 No Entry


    Record only the
    6 PCV No. 8 – Repairs, 100 No Entry disbursements in the
    8 PCV No. 9 – Transportation, P 150 No Entry Petty Cash Book.
    IMPREST FUND SYSTEM
    TRANSACTIONS JOURNAL ENTRIES
    2021
    Jan. 1 Reversing the petty cash fund Petty Cash Fund 350
    adjusting journal entry on 12/31 Supplies 250
    Transportation Expense 100

    4 PCV No. 7 - Supplies, P 350 No Entry


    6 PCV No. 8 – Repairs, 100 No Entry
    8 PCV No. 9 – Transportation, P 150 No Entry

    Jan . 8 Replenishment of petty cash fund Supplies (250 + 350) 600


    from December 24, 2020 to January
    Transp. Exp. (100+150) 250
    8, 2021.
    Repairs Expense 100
    Petty Cash Fund 950
    IMPREST FUND SYSTEM
    TRANSACTIONS JOURNAL ENTRIES
    2021
    Jan. 8 Replenishment of petty cash fund Supplies (250 + 350) 600
    from December 24, 2020 to January
    Transp. Exp. (100+150) 250
    8, 2021.
    Repairs Expense 100
    Petty Cash Fund 950

    Petty Cash Fund Supplies Transp. Expense


    (Beg) 650 (1/8) 600 (RJE) 250 (1/8) 250 (RJE) 100
    (RJE) 350
    (Bal.) 1,000 (Bal.) 350 (Bal.) 150

    At January 8, 2021:
    1. Supplies Expense = P 600 (Dr.) – P 250 (Cr. For 2020) = P 350 (actual expense for 2021)
    2. Transportation Expense = P 250 (Dr.) – P 100 (Cr. For 2020) = P 150 (actual expense for 2021)
    3. Repairs Expense = P 100 (actual expense for 2021)
    Computation of PCF Shortages/Overages
    COMPUTATION OF PCF SHORTAGES/OVERAGES
    The petty cash fund was established with an imprest balance of P
    1,500. During replenishment, the following were found inside the
    petty cash box:
    Currency and coin P 200
    Approved Petty Cash Vouchers:
    No. 201 – Postage Stamps 350
    No. 202 - Supplies 450
    No. 203 – Transportation expenses 100
    No. 204 – Employee advances (Vale) 350

    How much is the cash shortage /overage?


    COMPUTATION OF PCF SHORTAGES/OVERAGES
    Step 1: Account first the petty cash fund by physical counting.
    As accounted for (PER COUNT)
    Currency and coin P 200
    Approved Petty Cash Vouchers:
    No. 201 – Postage Stamps 350
    No. 202 - Supplies 450
    No. 203 – Transportation expenses 100
    No. 204 – Employee advances (Vale) 350 P 1,450
    COMPUTATION OF PCF SHORTAGES/OVERAGES
    Step 2: Deduct the accountability – Petty Cash Fund per GL/book
    As accounted for (PER COUNT)
    Currency and coin P 200
    Approved Petty Cash Vouchers:
    No. 201 – Postage Stamps 350
    No. 202 - Supplies 450
    No. 203 – Transportation expenses 100
    No. 204 – Employee advances (Vale) 350 P 1,450
    Accountability (PER LEDGER) (1,500)
    Petty Cash Fund Shortage P (50)
    COMPUTATION OF PCF SHORTAGES/OVERAGES
    If the cash shortage was traced during replenishment and it was due
    to negligence of the petty cashier, the journal entry would be:

    JOURNAL ENTRIES
    Supplies (350 + 450) 800
    Transportation Expense 100
    Advances to Employees 350
    Receivable from Cashier 50
    Cash in Bank 1,300
    Replenishment of PCF.
    THANK YOU!

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