4 Petty Cash Book
TR DEO
What is Petty Cash Book?
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Petty cash book is used to record low- value
cash payments.
Eg. Postages and stationery, cleansing,
travelling expense and even small cash
payments to creditors.
Reasons
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Lists the transactions for the transferring to ledger accounts
It acts as a ledger account for petty cash transactions
Head Cashier
$500
Maintaining the general
cash book and managing the expenses.
Petty Cashier
responsible for managing
small day-to-day cash payment
stationary ($ 50)
bus fare($5)
snack( $30)
$415Money left
85
Refill the amount until $500 in
every week
$500
5.2 The imprest system
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Petty Cash Imprest Amount is the amount of Cash the Petty Cashier
should start each month with.
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Every fixed amount of money is given to petty cashier in beginning.
Petty cashier spent during the period
In the end details are submitted to Head Cashier.
Head cashier refill the amount spent.
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5.3 The layout of a petty cash book
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A ledger account with several money columns with different categories
on the credit side are called analysis columns.
A column is used for each of main types of expense paid out by petty
cash.
Formula
5.4 Preparation of a petty cash book
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During the period,
Money received,
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Total received column in petty cash book
By Cash book
Dr
Cr
Money paid,
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Specific expense account
Total paid column in petty cash book
Dr
Cr
Walkthrough 5.1
◼ Maitreyi keeps an analysed petty cash book using the imprest system. The amount of the imprest is $150. She provided
the following information:
◼ 20–1
$
Voucher number
◼ November 1
Balance 150
◼ 5 Paid window cleaner
10
1
◼ 8 Bought pens and pencils
4
2
◼ 14 Paid H Singh, a credit supplier
20
3
◼ 17 Paid taxi fare
9
4
◼ 21 Bought computer paper
7
5
◼ 25 Paid bus fares
3
6
◼ 27 Paid A Sharma, a credit supplier
32
7
◼ 29 Paid office cleaner
30
8
a Write up Maitreyi’s petty cash book for the month of November 20–1. The petty cash book should have four analysis
columns – cleaning, stationery, travel expenses and ledger accounts.
b Balance the petty cash book on 30 November and carry down the balance. Show the restoration of the imprest on 1
December 20–1.
c Make the necessary entries in Maitreyi’s nominal ledger and purchases ledger on 30 November 20–1