When the fund is replenished, the credit to Cash is for the difference between the established amount and the actual cash in the fund. We would debit all vouchered items. Any discrepancy should be debited or credited to an account called Cash Over and Short.
How often are petty cash fund replenished?
every two to four weeks
For this reason, companies typically establish a petty cash fund that needs to be replenished every two to four weeks. Companies assign responsibility for the petty cash fund to a person called the petty cash custodian or petty cashier.
How do you record replenishment of petty cash?
To show this, debit your Petty Cash account and credit your Cash account. When the petty cash fund gets too low, you must refill it to its set amount. Then, create another journal entry debiting the Petty Cash account and crediting the Cash account.
What happens if the petty cash fund is not replenished?
Liabilities will be overstated on the balance sheet. Which of the following statements is false if the petty cash fund is not replenished at the end of the accounting period? a. Net income will be overstated or net loss will be understated.
What is the journal entry for petty cash reimbursements?
The initial petty cash journal entry is a debit to the petty cash account and a credit to the cash account. The petty cash custodian then disburses petty cash from the fund in exchange for receipts related to whatever the expenditure may be.
What do you mean by petty cash replenishment?
Petty cash replenishment refers to the process of restoring the cash balance in the petty cash fund back to its original imprest amount.
How much cash is in a petty cash account?
Suppose for example a business maintains a petty cash fund of 300. At the end of an accounting period a count of the petty cash shows that the fund contains cash of 240 and expense vouchers for supplies of 40 and postage of 20. The total petty cash expenditure is 60 (supplies 40 + postage 20).
Is the balance on the petty cash fund always constant?
It should be noted that there is no entry made to the petty cash fund. With an imprest system the balance on the fund (cash + vouchers) is always constant (300). The cash added to the fund simply replaces the expense vouchers.
When do you withdraw cash from petty cash fund?
The accounting records will show the following bookkeeping entries when the business withdraws cash to replenish the petty cash fund. It should be noted that there is no entry made to the petty cash fund.
