cashbox, the total money in the cashbox is restored to its original amount.
The fund is now ready for a new cycle of petty cash payments.
Petty cash receipts with either no signature or a forged signature usually indicate misuse of petty cash.
Companies respond with surprise petty cash counts for verification.
Illustrating a Petty Cash Fund
To illustrate, assume Z-Mart establishes a petty cash fund on November 1
and designates one of its office employees as the petty cashier. A $75 check
is drawn, cashed, and the proceeds given to the petty cashier. The entry to
record the setup of this petty cash fund is
Establish a petty cash
After the petty cash fund is established, the Petty Cash account is
not debited or credited again unless the amount of the fund is
petty cash disbursements are not evidenced by a check, the initial petty cash fund
is evidenced by a check, and later petty cash expenditures are evidenced by a check to replenish them
Next, assume that Z-Mart’s petty cashier makes several November
payments from petty cash. Each person who receives payment is required to
sign a receipt. On November 27, after making a $46.50 cash payment for
tile cleaning, only $3.70 cash remains in the fund. The petty cashier then
summarizes and totals the petty cash receipts as shown in
Petty Cash Payments Report