dr postage expense 36 dr delivery exp 13 dr misc exp 25 dr merch inv 11 cr cash 85 (36+13+11+25=85) Reimburse the petty cash fund and increase it to $260. Cash equivalents are highly liquid securities and other assets that can be easily converted into cash: money market funds, commercial paper, or short-term debt, like Treasury bills. Use a petty cash book or spreadsheet to record all expenses and replenishment. A check for cash is prepared in an amount to bring the fund back up to the original level. It has petty cash management solutions ideal for organizations with multiple locations. Petty cash is a small amount of cash that is kept on a business or company's premises to pay for minor expenses and needsusually, no more than a few hundred dollars. The fund size depends on the companys needs but should be large enough to last at least three to four weeks. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. The entry to replenish the petty cash fund will include: Petty cash funds typically depend on how frequently your business makes small purchases. There are deposits in transit on the account at month-end. While it's easy to understand and simple to use, petty cash is subject to abuse, easy to lose track of, and vulnerable to theft. Debit to Office Supplies for $73. Cash is hard to secure and impossible to track; it's very easy for bills to disappear without a traceeven if you've established a careful system of receipts or vouchers. A debit to Petty Cash for $383. The receipts are known as petty cash vouchers. Clayborn's May bank statement shows $15,800 on deposit in the bank. If the petty cash fund is short, a debit is entered to represent a loss. The custodian should maintain accurate records of all transactions related to the petty cash fund. This might be the result of simple mistakes, such as math errors in making change, or perhaps someone failed to provide a receipt for an appropriate expenditure. The difference is debited to Cash Short (Over): The Cash Short (Over) account is an income statement type account. Either routine or unexpected, these are transactions for which writing a check or using a credit card is impractical or inconvenient. - NSF check returned by bank - 480 The custodial duties generally include enforcing petty cash rules and regulations, requesting replenishments, and dispensing funds. The principles of internal control include: December 4 Freight charge for merchandise purchased $62 Question: Havermill Company establishes a $440 petty cash fund on September 1. ", Accounting Coach. Consider keeping your petty cash locked in a drawer, safe, or filing cabinet. Petty cash funds are used to make small cash disbursements, and the size of the fund depends on the companys needs. How does petty cash management software help with the reimbursement process? Likewise, if you have a pet who's a social media star, you may be able to write off their care. In larger corporations, each department might have its own petty cash fund. A designated employee, the petty cash custodian, accounts for your businesss use of petty cash.