1. PETTY CASH FUND MANAGEMENT

2. PETTY CASH FUND MANAGEMENT
I. Definition of Cash
Cash is the standard medium of exchange and the basis for measuring and accounting for all other items
It is generally classified as current assets
Cash consists of coin, currency, an available funds on deposit at bank and other financial institutions.
Cash must be immediately available for the payment of current obligation and must be free from any contractual restriction. It is available for unrestricted withdrawal.

3. II. Classification of Cash
II. Classification of Cash
A. Cash in Bank
It is included saving accounts, R/C
B. Cash on Hand
It is available in the company for paying daily operational expenses.
Cash on hand is prepared to pay for small payment called petty cash

4. How is Petty Cash Transaction Controlled and Reported?
As control measures of petty cash fund, the procedures are widely used:
One person is usually given the responsibility of operating the petty cash fund
Each time an expenditure is made, a source document (called a petty cash voucher) is prepared for payment evidence. The voucher is signed by the person receiving the cash and by the person in charge of the fund (petty cashier). The petty cash voucher includes the amount and purpose of the expenditure.
A record (usually multi columned) is kept to record each expenditure from the petty cash fund
Each time the fund is almost depleted and also at the end of every accounting period, a check is prepared for the amount spent and cashed to replenish the petty cash fund.

5. PETTY CASH RECEIPT No. 121 Date August 1, 2001
3 00
PETTY CASH RECEIPT
No Date August 1, 2001
Paid to Metropolitan Times Amount
For Daily Newspaper
Charge to Miscellaneous Administrative Expense
Payment received:
S.O. Hall Approve by N.E.R

6. IV. The Methods of Petty Cash Fund
The Imprest System
The Fluctuating System
A. A simple method in obtaining reasonable control while adhering to the rule of disbursement by check
B. The imprest system works as followed:
Someone is designed petty cash custodian and given a small amount of currency from which to make small payments. The transfer of funds to petty cash is recorded.
As disbursements are made the petty cash custodian obtains signed receipts from each individual to whom cash is paid. If possible, evidence of the disbursement should be attached to the petty cash receipt.

7. Petty cash transaction is not recorded until the fund is reimbursed and then such entries are recorded by other person besides the petty cash custodian
When the supply of cash runs low, the custodian presents a request to the general cashier for reimbursement supported by the petty cash receipts and other disbursement evidence. The custodian receives a company check to replenish the fund.
If it is decided that the amount of cash in the petty cash funds is excessive, an adjustment may be made.
Entries are made to the Petty Cash account only to increase or decrease the size of the fund

8. No Description Journal1
An establishment of petty cash fund
Petty Cash
Cash
xxx 2
Payment expenses by the petty cash custodian
No Entry 3
Receiving disbursement evidences and replenished petty cash
Kinds of Expenses 4
Petty cash funds are too small and needed to increase petty cash fund balance
Xxx 5
Petty cash funds are too much and needed to decrease petty cash fund balance
At the end of period, to make an adjusting entries (If there are unrecorded transactions) 6
At the beginning of next period, the reversing entries is developed
Petty cash

9. Date
Description
Journal (Rp)
2008 1
Airlangga, Corp established petty cash funds Rp. 10,000,000
Petty Cash
10,000,000
March
Cash 14
The petty cash receipts indicate expenditures for the following items:
No Entries
Office supplies Rp. 5,000,000
Postage expenses Rp. 500,000
Utility expenses Rp. 3,000,000
Miscellaneous expenses Rp. 300,000 15
Replenished petty cash funds
Office supplies
5,000,000
Postage expenses
500,000
Utility expenses
3,000,000
Miscellaneous expenses
300,000
8,800,000

10. Date
Description
Journal (Rp)
2008 16
Petty cash funds are too small and needed to increase petty cash fund balance, Rp. 2,500,000
Petty Cash
2,500,000
March
Cash 31
At the end of period, the expenditures are unrecorded for the following items:
Adj.
Postage expenses Rp. 300,000
Postage expenses
300,000
Utility expenses Rp. 1,200,000
Utility expenses
1,200,000
Miscellaneous expenses Rp. 100,000
Miscellaneous expenses
100,000
1,600,000
April 1
At the beginning of the next period, the reversing entries to be made

11. No. Imprest System Fluctuating System
The Fluctuating System
A. The differences between imprest system and fluctuating system
No.
Imprest System
Fluctuating System 1.
The petty cash funds balance is fixed
The petty cash funds balance is fluctuating. It depends on the amount of receipts and disbursements in petty cash funds 2.
The expenditures of petty cash funds just recorded at replenished petty cash funds
Each expenditure must be recorded at the transaction occured 3.
The function of petty cash recording is as a tool of control and it can not be posted to general ledger
The function of petty cash recording is as a journal. It is used to be a source of posting to each account in general ledger 4.
It is necessary to make adjusting entries for unrecorded transaction at the end of period. The beginning of the next period must be made reversing entries
It is not necessary to make adjusting entries for unrecorded transaction at the end of period. Adjusting entries are made at the beginning of the next period

12. No. Description Journal
B. The Procedures of Recording Petty Cash Fund in General Journal
No.
Description
Journal 1.
An establisment of petty cash fund
Petty Cash xxx
Cash xxx 2.
Payment expenses by the petty cash custodian
Kinds of expenses xxx
Petty Cash xxx 3.
Petty cash funds are too small and needed to increase petty cash fund balance 4.
Receiving disbursement evidences and replenished petty cash

13. Date Description Journal (Rp)
a. Recording of Petty Cash Transactions to General Journal in Fluctuating System
Date
Description
Journal (Rp)
2008 1
Kartika, Corp establishes petty cash funds Rp. 10,000,000
Petty Cash
10,000,000
March
Cash 3
Purchasing office supplies Rp. 5,000,000
Office Supplies
5,000,000 4
Payment to postage expenses Rp. 500,000
Postage Expenses
500,000 7
Payment to utility expenses Rp. 3,000,000
Utility Expenses
3,000,000 10
Payment to Miscellaneous expenses Rp. 300,000
Miscellaneous expenses
300,000 14
Petty cash funds are too small and needed to increase petty cash fund balance, Rp. 2,500,000
2,500,000 15
Replenished petty cash funds Rp. 6,000,000
6,000,000

14. b. The general Journal is posted to petty cash account in general journal
Date
Description
Ref
Debit (Rp)
Credit (Rp)
Balance
Debit
Credit
2008 1
Cash 3
10,000,000
March
Office Supplies
5,000,000 4
Postage expenses
500,000
4,500,000 7
Utility expenses
3,000,000
1,500,000 10
Miscellaneous expenses
300,000
1,200,000 14
2,500,000
3,700,000 15
6,000,000
9,700,000