FINANCIAL ACC 101

PETTY CASH BOOK

Hey Guys, It's a New Day again, hope your day yesterday was awesome cos mine was.  Well for today we are beginning this course afresh like the others we are revisiting what we have treated in order to better digest it.

Petty Cashbook is the book for recording small expenses. The rational behind the system is to reduce the numerous cash payments for small expenses. Example- Postage, Stationery, etc. The System for recording petty cash transactions is called Imprest System. In this system, a specific amount is given to cashier to start off accounting period. This specific amount is called Cash Float. The Source documents for petty cash book are involved receipts and vouchers. At frequent intervals he must be reimbursed for the cash disbursed for the period concerned thus bringing the cash balance to the formal amount.

The Petty cashbook is a double entry book and must be included in the Trial Balance. The Maximum level of cash held in the petty cash book is fixed and the cashier must be reimbursed for the amount he has paid out.

Advantages of Petty Cashbook:

a. The Risk of Fraud will be eliminated.

b. The Burden of the Main Cashier will be reduced.

Procedures of Petty Cashbook:

a. Credit  Cashbook with the cheque drawn on the main cash book

Debit petty cashbook with the amount of Float

b. Credit petty Cashbook with payments made and analyse them

c. All Payments made out of the petty cashbook must be supported by authorized vouchers.

d. Analysis column  must be totaled at intervals and the total transferred to their respective Nominal Ledger.

e. Reimburse the Petty Cash every week or month using the Imprest system.

ILLUSTRATION 1:

The following information was extracted from the books for the month of January 1997

Jan 1- Petrol N40

Jan 3-Postage Stamps N15

Jan 4- One ream of typing paper N30

Jan 6- Segun Settlement of Account N150

Jan 7- Office cleaning materials N20

Jan 8- Travelling N40

Jan 10- Refund of a Clerk's Bus Fares N20

Jan 14- Car Polish N30

Jan 16- Petrol and Oil N70

Jan 18- Registered Mail N20

Jan 20- Office carpet shampoo N10

Jan 21- Petrol N70

Jan 25- Petrol N70

Jan 27- Brown Settlement of Account N250

Jan 28- Smith Settlement of Account N60

Jan 29- Carbon Paper N40

You are required to:

* Enter the above transactions into a suitably ruled petty cash book.

* Repletion of the Imprest.

SOLUTION:

Petty Cash Book
Receipt	F	Date	Details	Total	Travelling Expenses	Postage & Stationery	Motor Expenses	Cleaning	Ledger Ac
1,000	CB	1-Jan	Bal b/d
		1-Jan	Petrol	40			40
		3-Jan	Postage Stamps	15		15
		4-Jan	Typing Paper	30		30
		6-Jan	Segun	150					150
		7-Jan	Cleaning Materials	20				20
		8-Jan	Travelling	40	40
		10-Jan	Clerk's Bus Fare	20	20
		14-Jan	Car Polish	30			30
		16-Jan	Petrol & Oil	70			70
		18-Jan	Registered Mail	20		20
		20-Jan	Office Carpet	10				10
		21-Jan	Petrol	70			70
		25-Jan	Petrol	70			70
		27-Jan	Brown	250					250
		28-Jan	Smith	60					60
		29-Jan	Carbon Paper	40		40
				935	60	105	280	30	460
935	cb	30-Jan	Cash
		30-Jan	Bal c/d	1, 000
1, 935				1,935
1, 000		1-Feb	Bal b/d

NOTE: PARTS OF THIS POST WERE CULLED FROM TONAD ESSENTIAL FINANCIAL ACCOUNTING FOR SENIOR SECONDARY SCHOOLS BY O.A LONGE & R.A KAZEEM.  WE AT EDU-MADE-EASY RESPECT THIS CRAFT TOO MUCH TO DENY ITS ORIGIN. THANK YOU.

Hope this was very helpful to you, leave a comment of what you think of this tutorial and your questions below. Have a Blessed Day and Remember You are Amazing. God Bless.