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    Topic 2 - Petty Cash Fund

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    Just Alex
    1. The document discusses topics related to petty cash funds, including the correct journal entries for establishing, disbursing from, replenishing, and adjusting the petty cash fund at year-end. 2. It provides guidance on calculating any shortage or overage in the petty cash fund by comparing the total accountability of the custodian to the total amounts accounted for. 3. The adjusted balance of the petty cash fund at the end of the year is calculated by adjusting the cash and coins at the count date for subsequent receipts and disbursements, and removing any non-petty cash items. Replenishment and accommodation checks are then added to determine the adjusted balance.

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    © All Rights Reserved
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    Topic 2 - Petty Cash Fund

    Uploaded by

    Just Alex
    160 views2 pages
    1. The document discusses topics related to petty cash funds, including the correct journal entries for establishing, disbursing from, replenishing, and adjusting the petty cash fund at year-end. 2. It provides guidance on calculating any shortage or overage in the petty cash fund by comparing the total accountability of the custodian to the total amounts accounted for. 3. The adjusted balance of the petty cash fund at the end of the year is calculated by adjusting the cash and coins at the count date for subsequent receipts and disbursements, and removing any non-petty cash items. Replenishment and accommodation checks are then added to determine the adjusted balance.

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    TOPIC 2_PETTY CASH FUND

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    1. The document discusses topics related to petty cash funds, including the correct journal entries for establishing, disbursing from, replenishing, and adjusting the petty cash fund at year-end. 2. It provides guidance on calculating any shortage or overage in the petty cash fund by comparing the total accountability of the custodian to the total amounts accounted for. 3. The adjusted balance of the petty cash fund at the end of the year is calculated by adjusting the cash and coins at the count date for subsequent receipts and disbursements, and removing any non-petty cash items. Replenishment and accommodation checks are then added to determine the adjusted balance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    160 views2 pages

    Topic 2 - Petty Cash Fund

    Uploaded by

    Just Alex
    1. The document discusses topics related to petty cash funds, including the correct journal entries for establishing, disbursing from, replenishing, and adjusting the petty cash fund at year-end. 2. It provides guidance on calculating any shortage or overage in the petty cash fund by comparing the total accountability of the custodian to the total amounts accounted for. 3. The adjusted balance of the petty cash fund at the end of the year is calculated by adjusting the cash and coins at the count date for subsequent receipts and disbursements, and removing any non-petty cash items. Replenishment and accommodation checks are then added to determine the adjusted balance.

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    © All Rights Reserved
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    TOPIC 2: PETTY CASH FUND

    Expected question(s):

    1. What is the correct journal entries affecting cash fund (PCF)?


    2. What is the amount of shortage or overage of petty cash fund?
    3. What is the adjusted balance of petty cash fund at the end of the year?

    2) What is the correct journal entries affecting petty cash fund?

    Answer:

    Transaction Journal Entry Amount


    1. Establishment Dr. Petty Cash Fund xx Equal to imprest balance
    Cr. Cash in Bank xx Equal to imprest balance
    2. Disbursement No entry
    3. Replenishment Dr. Various Expenses xx Equal to amount of vouchers
    Cr. Cash in Bank xx Amount needed to bring back the remaining balance to imprest balance
    4. Year-end adjustment Dr. Various Expense xx Equal to amount of vouchers
    Cr. Petty Cash Fund xx Amount needed to bring down the imprest balance to remaining balance

    3) What is the amount of shortage or overage of petty cash fund?

    Answer:

    Accountability Accounted

    1. Imprest balance of petty cash fund X X Currencies and coins 1


    2. Undeposited collection currencies from customer X X Undeposited collection, check from customer 2
    3. Undeposited collection check from customer X X Paid vouchers (regardless of date) 3
    4. Unclaimed salaries X X Replenishment check 4
    5. Excess of advance of travel X X IOUs 5
    6. Employee contributions (always) X X Accommodation check (all) 6
    _ X Employee contribution (only if closed) 7

    Total X X Total

    Total accountability of custodian X


    Less: Total accounted by custodian X
    Shortage (overage) X
    4) What is the adjusted petty cash fund at the end of the year?

    Answer:

    Currencies and coins at the date of the count X


    Add: Disbursements after December 31 X
    Less: Receipts after December 31 X
    Currencies and coins at December 31 X
    Less: Cash included in currencies but do not belong to PCF X
    1. Undeposited currencies collection X
    2. Unclaimed salaries X
    3. Excess of advance travel X
    4. Employee contributions (only if open) X X
    Currencies and coins belonging to PCF at December 31 X
    Add: Replenishment checks X
    Add: Accommodation checks (valid checks at December 31 only) X
    ADJUSTED BALANCE OF PCF AT DECEMBER 31 X

    Examples of Checks:

    1. Employee’s checks (good, NSF or PDC) in settlement of cash advanced from the petty cash fund;
    2. Check of the company as replenishment of petty cash fund (replenishment check);
    3. Check of the company payable to the petty cash custodian representing his/her salary.

    Note: If the problem is silent, a check in which the payee is to “Cash” is assumed to be an accommodated check.

    Examples of checks for deposits that are part of the petty cash impurities and if included in the petty cash accounted, must be included also in the petty cash accountabilities:

     Customer’s checks – these are checks in the name of the client company and the maker is a customer. These represent collection of accounts receivable from a customer.
     Company’s check in the payment of a liability (e.g. utilities)
     Cash collections of accounts receivable or sales
     Cash collections of accounts receivable or sales may be evidenced by sales invoices or official receipts that are included in the petty cash box.

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