1. LESSON 5-4 Petty Cash

2. TERMS Petty cash: an amount of cash kept on hand (in cash box) and used for making small payments Maximum amount differs between businesses TechKnow Consulting’s maximum is $100.00 Petty Cash is an asset – What is the normal balance? Debit normal balance You write a check to the bank to establish a petty cash account: Source document is a check Money is locked in petty cash box and kept with main secretary

3. ESTABLISHING A PETTY CASH FUND August 17. Paid cash to establish a petty cash fund, $100.00. Check No. 8. What two accounts are affected and how? Note: The only time you should use the “Petty Cash” Asset Account is when you establish the fund General Sales Credit Cash DateAccount Title Doc No. Post Ref DebitCreditDebitCredit

4. TRACKING PETTY CASH FUND PAYMENTS Petty cash slip: a form showing proof of a petty cash payment Petty Cash Slips are completed every time money is spent from the petty cash box

5. PETTY CASH Petty Cash slip is completed every time money is spent Petty Cash slip stored in petty cash lock box Payments are journalized: At the end of each month -or- When the balance in the box reaches the minimum allowed (TechKnow Consulting’s minimum is $25.00) At the end of the month or when it reaches the minimum the fund is replenished: returned to the maximum ($100)

6. REPLENISH PETTY CASH Replenish Petty Cash Maximum balance is $100 As you spend money from petty cash box, balance goes down At the end of the month or when account reaches the minimum balance ($25), you need to get the balance in the box back to $100.

7. REPLENISH PETTY CASH Beginning balance $100.00 Less petty cash slips Paid $20 miscellaneous exp. Paid $10 for advertising exp. 30.00 Equals amount left in fund $70.00 End of month replenish back to $100 Write a check to get balance back to $100 ($30 to replenish) Record payment to the appropriate accounts for the $30 Refer to petty cash slips for the accounts used for purchases August 31. End of Month Determine amount of Petty Cash to Replenish

8. REPLENISHING PETTY CASH August 31. Paid cash to replenish the petty cash fund: miscellaneous expense, $20.00; advertising, $10.00. for a total of $30. Check No. 12. Which accounts are affected and how? General Sales Credit Cash DateAccount Title Doc No. Post Ref DebitCreditDebitCredit

9. TERMS REVIEW petty cash petty cash slip

10. WTG July 3. - Paid Cash to establish a petty cash fund, $250.00 C57 July 31 - Paid cash to replenish the petty cash fund, $78.00: Supplies $25.00, miscellaneous expense $8.00, repairs, $45.00. C97 General Sales Credit Cash DateAccount Title Doc No. Post Ref DebitCreditDebitCredit