What does it mean to replenish the petty cash fund?
Replenishing the petty cash fund means the petty cash custodian requests and receives cash from the company’s regular checking account in order to have the cash on hand equal to the amount reported in the general ledger account, Petty Cash.
Let’s assume that Company X has a petty cash fund of $100 and Mary is the company’s employee responsible for handling the petty cash transactions. At all times Mary should have $100 in some combination of cash and petty cash vouchers (receipts). Let’s assume that Mary has $20.00 in cash and she has petty cash vouchers of $79.70. She knows that $20.00 is too little cash to have on hand. As a result she will request that a check be written from the company’s regular checking account in the amount of $80 ($100.00 that is reported in the Petty Cash account minus the $20.00 that is actually on hand.) The replenishment means the cash in the custodian’s possession will be returned to $100, even if the vouchers do not equal the amount needed ($80 in this example). The small difference will be expensed along with the amounts shown in the vouchers.
It is important to point out that the $80 check will be credited to Cash (the company’s checking account). No entry will be made to the Petty Cash account.
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When you replenish the Petty cash Fund, you expense out all the cash receipts that have been taken against the cash and cut a check for the amount of the expenses. the Petty Cash Fund is kept at a given and approved amount set forth by Management like $1,000. It is carried at that amount on the Balance sheet at all times even if the fund itself is not that much. When your cash runs out in the Petty Cash Fund you reimburse or replenish it.
How do i increase the petty cash float
Errol
Increasing petty cash float is closing the prevois amount and establishing a new balance.
to increase the petty cash float, you better try to do the following
1. receive or give a requiest sheet to increase the amount of petty cash to the needed new balance and get approval
2. settle the previous p.cash and close it
(petty cash expense -indetail Dr
Cash on hand (with receipt) Dr
petty cash closing Cr
JV # XXXXXX
( Bank depoist Dr
Cash on hand Cr
Depoist ticket #XXXXX
(New petty cash amount Dr
Bank Cr
PV #XXXXX
Thank you so much how you always clearify every thing, really I can’t express how happy i am about your question and answer column
In practice it has proven that the records are much more transparent when the actual petty cash transactions are directly recorded on the petty cash account. That means, when the petty cash fund is replenished, checking or cash is credited and the petty cash account is debited. Consequently, expenses made out of the petty cash fund are also recorded directly on the petty cash account. The petty cash system with an approved amount is the same - but records are much more transparent - especially when there are many petty cash funds.
I am wondering, is there any good reason why the petty cash fund account should not be ‘touched’ and should show merely the approved fund balance but neither the replenishing transactions nor the petty cash expenses?
Let’s say Mary Jones was the petty cash custodian
We currently write our petty cash replenishment checks to:
“Mary Jones”
Then in the memo part of the check we write:
“Petty Cash Reimbursement”
Mary wants the check to be made out to “Petty Cash” with her name elsewhere on the check as petty cash custodian. We belive it is poor accounting policy to write any check to Cash, much less Petty Cash.
Please comment
Susan