Petty Cash Journal Entries
Quick Answer: Petty cash is established by transferring funds from the main cash account. Replenishment entries record expenses based on receipts, adjusting for cash short or over. The imprest system maintains a fixed fund balance.
1. Establishing the Petty Cash Fund
Dr. Petty Cash — $500
Cr. Cash — $500
(Establishes $500 petty cash fund)
Cr. Cash — $500
(Establishes $500 petty cash fund)
2. Replenishment (Receipts Method)
When fund runs low, check receipts and record expenses:
Dr. Office Supplies — $45
Dr. Postage Expense — $32
Dr. Miscellaneous Expense — $23
Cr. Cash — $100
(Total receipts = $100; fund stays at $500)
Dr. Postage Expense — $32
Dr. Miscellaneous Expense — $23
Cr. Cash — $100
(Total receipts = $100; fund stays at $500)
3. Cash Short or Over
If receipts + remaining cash ≠ fund amount:
Cash short (missing $5):
Dr. Office Supplies — $45
Dr. Postage — $32
Dr. Cash Short/Over — $5
Cr. Cash — $82
Cash over (extra $3):
Dr. Office Supplies — $45
Dr. Postage — $32
Cr. Cash — $80
Cr. Cash Short/Over — $3
Dr. Office Supplies — $45
Dr. Postage — $32
Dr. Cash Short/Over — $5
Cr. Cash — $82
Cash over (extra $3):
Dr. Office Supplies — $45
Dr. Postage — $32
Cr. Cash — $80
Cr. Cash Short/Over — $3
4. Increasing the Fund
Dr. Petty Cash — $300
Cr. Cash — $300
(Fund increased from $500 to $800)
Cr. Cash — $300
(Fund increased from $500 to $800)
