Although petty cash payments are usually quite small, they must be properly accounted for. A petty cash record may be maintained using a book, log or similar document. This record will be used as the basis for recording petty cash transactions in the general ledger.
Most of the petty cash transactions are payments for expenses. However, money withdrawn from the bank account to top up petty cash should also be recorded. Top-ups of the petty cash float are recorded in the petty cash record as cash received and in the bank records as a cash payment.
Recording petty cash transactions is similar to recording bank transactions. However, as receipts into petty cash will be withdrawals of cash from the bank account, there is no need for any further analysis of the petty cash receipts.
Petty cash payments could be for a range of different expenses, so there will be a need for analysis of the payments made. This analysis will normally be consistent with the general ledger expense account headings.
The petty cash payments records should therefore enable the following to be recorded:
The source documents for recording petty cash payments in the petty cash book or log are the petty cash vouchers. At regular intervals, perhaps weekly or every time the petty cash float is topped up, these petty cash vouchers should be recorded in the petty cash book or log.
Each voucher represents one petty cash transaction, and should be entered on one line of the book or log.
The vouchers should be recorded in sequential number order (according to their identifying number).
The payments are analysed in the petty cash book or log so that the expenses can be posted to the relevant accounts in the general ledger. There should be an analysis column in the petty cash book or log for each expense account in the general ledger for which petty cash expenses may be incurred.
When an expense includes sales tax, the amount of the expense in the Total column should be for the total spending, including the sales tax. In the analysis columns, however, the sales tax is shown separately, and the other analysis columns record the net expense i.e. excluding sales tax.
Given below are a number of petty cash vouchers.
Write up the petty cash book or log to record these transactions.
| Date | Receipts $ | Voucher/Ref no | Details | Total payment | Sales tax $ | Travel expenses $ | Office expenses $ | Postage $ | Stationery | Sundry $ |
|---|---|---|---|---|---|---|---|---|---|---|
| 22/3 | 7 10 | |||||||||
| 340 | Stamps | 7 10 | ||||||||
| 22/3 | 28 00 | 4 66 | 23 34 | |||||||
| 341 | Stationery | |||||||||
| 22/3 | 6 40 | 6 40 | ||||||||
| 342 | Rail fare | |||||||||
| 26/3 | 3 49 | 3 49 | ||||||||
| 343 | Refreshments | |||||||||
| 26/3 | 2 40 | 2 40 | ||||||||
| 344 | Taxi | |||||||||
| 26/3 | 11 40 | 11 40 | ||||||||
| 345 | Rail fare |