Chapter 10
Cash Controls
311
5.
Provide a summary of petty cash.
At the end of the period, which in this example is one week,
the petty cash custodian
prepares a summary that lists
the details of the fund before
it is reimbursed. The
summary sheet is shown in
Figure 10.30.
The petty cash summary
should include a list of
all the items, in groups,
paid with the petty cash
fund. Both subtotals and
a grand total should be
calculated. In this example
the grand total comes to
$83. Subtracting $83 from the original balance of $100 gives us an amount of $17.This should
be the remaining balance in the petty cash box.
6.
Reconcile any overage or shortage.
The petty cash custodian must take care of any amounts short
or over in the petty cash box.This is done by making additions or subtractions to the account called
cash over and short. In our current example, there was only $15 in the petty cash box,meaning there
was a $2 shortage. Such discrepancies can result from a miscount of coins, an overpayment during
the period, or rounding cash transactions to the nearest nickel. The total disbursements recorded,
along with any cash short or over, constitute the total amount to be reimbursed to petty cash to
restore it to its original value of $100. In this case, the amount is $85.
7.
Present summary slip to a supervisor.
The petty cash custodian presents her supervisor with
a summary slip, together with all supporting vouchers. After reviewing these documents, the
supervisor provides the petty cash custodian with a cheque to reimburse the petty cash fund.
The receipts are stamped “paid” so that they cannot be reused.
8.
Reimburse the petty cash fund.
The petty cash custodian cashes the cheque (in this example
the cheque is for $85) and replenishes the fund to its original amount ($100).
Posting Petty Cash to the General Ledger
We have examined the steps that an organization must take when establishing a petty cash fund.
Now look at how this process affects the organization’s general ledger.
We have already described the transaction that occurs
when thepetty cash fund is initially established.Cash is
credited and petty cash is debited—both for the same
amounts, which in our example was $100 as shown
in Figure 10.28. Until now, all the activity has been in
the physical petty cash box itself, with no transactions
affecting the ledger.When it is time to replenish the fund, we need to increase the amount of petty cash to
$100 and allocate the amounts used to the appropriate expense accounts.
______________
Figure 10.30
Petty Cash Summary Sheet
Period:
Dec. 10–Dec. 17
Opening Balance $100.00
Parking
Dec. 10 $10.00
Dec. 12 6.00
Dec. 14 5.00 $21.00
Delivery
Dec. 10 $18.00
Dec. 11 6.00 $24.00
Office Supplies
Dec. 13 $ 7.00
Dec. 16 13.00 $20.00
Gasoline
Dec. 14 $18.00 $18.00
Total Disbursements $83.00
Cash over and short $2.00
Total to be reimbursed to Petty Cash $85.00
Opening balance
less disbursements
FIGURE 8.26
Transferring assets from one account
(e.g. cash) to another account (e.g. petty cash)
has no impact on owner’s equity.
WORTH REPEATING
