The Analytical Petty Cash Book and the Imprest System

Petty Cash Book

The Petty Cash Book is a type of cash book used to record small expenses (payments) which
are carried out on a regular basis. One person is usually responsible for managing this book
and that person is called the Petty Cashier.
Examples of these expenses:

 Stationery
 Travelling
 Postage
 Petrol
 Cleaning Supplies
 Cleaner’s wages

Generally the only receipt that will be recorded in the Petty Cash Book is the amount
received from the main or senior cashier. However, sometimes small cash receipts may be
collected by the Petty Cashier for telephone calls.

Source Document

The Petty cash voucher is used as the source document for the petty cash book. In some
organizations, petty cash receipts are used.
Each time the cashier gives money to the petty cashier, the following will be done:

 The cashier will – Credit the Cash Book

 The petty cashier will – Debit the Petty Cash Book.

Each time the petty cashier makes a payment he/she prepares a voucher which is given to the
respective individual. The voucher will contain information such as:
1. Voucher number
2. What the payment is for
3. Signatures of both the petty cashier and the person receiving the cash.

N.B. When the individual returns with the item purchased, the receipt or bill will be
attached to the petty cash voucher as proof.

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 PETTY CASH VOUCHER

Voucher # __________ Date ______________

Quantity Description Amount

Signed _______________ Authorised ____________

NB. Each organization will design their Petty Cash voucher to suit their need.

Advantages of using a Petty Cash Book

1. It enables the petty cash to be kept by a junior staff of the accounts department
(petty cashier). This will allow the main cashier to focus on other major accounting
tasks.

2. The petty cash book keeps numerous small expenditure (payments)out of the cash
book.
Note: The main cashier of the business will give the petty cashier the money for
making small payments. When this is done the cashier will creditthe cash book
and the petty cashier will debit the petty cash book.

3. It reduces postings to individual expense accounts.

That is, instead of posting small payments to an expense account each time a payment
is made for that particular expense, the payment is first recorded in the Petty Cash
Book. At the end of the period, each expense column is totaled and that total is
posted to the appropriate expense accounts in the General Ledger.

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Cash Float
The fixed amount that the petty cashier starts each period with is called theCASH FLOAT.
Imprest System
Is a system where a refund is made of the total paid out in a period to restore the float or the
original amount. In other words the main/senior cashier will reimburse, replenish, refund, or
give back the petty cashier the amount he/she spent (paid out) during the period.

Reimbursement can also be done during the accounting period. This can occur if the
number of payments or the amount for each expense item has increased. The float can be
increased or decreased at any time.
Example: $
If the cash float was 2 000
Petty cashier paid out 1 650
Petty cash in hand 350

The main cashier now gives the petty cashier the amount paid out 1 650

Cash in hand at the end of the period or after reimbursement 2 000

Analytical Petty Cash Book

This book shows the breakdown of the various small payments which were made. Therefore,
there will be an individual column for each small payment (expense). The total from each
column will be transferred to the respective expense account in the General Ledger.
NB. The ledger folio and ledger account columns are used when a creditor is paid or a
debtor is refunded from the petty cash.

Format of the Petty Cash Book

Dr Cr (Analysis Columns)
Receipt Fo Date Details Vouche Total Travellin Postage Stationer Ledger Ledger
r Paid g y Folio Account
No. s

The Receipt column is the DEBIT SIDE of the Petty Cash Book. The corresponding entry
will be on the CREDIT SIDE of the Cash Book. The credit side of the Petty Cash book is
used to record all the payments made by the petty cashier.
Every time a payment is made the amount is recorded twice: once in the payment
column and a second time in the relevant analysis column.

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 N.B. Funds from the Petty Cash book may be used to pay creditors or to refund a debtor.
In such a case, the Ledger folio column and the Ledger account column are used.
Balancing-off the Petty Cash Book
The petty cash book can be balanced off using one of two (2) methods.
1. Balancing off showing reimbursement at the beginning of the next period or month.
2. Balancing off showing reimbursement at the end of the current period or the end of
the current month.

Method 1 - – Reimbursed at the beginning of the next month/period.

1. Balancing off showing reimbursement at the beginning of the next period or month.

 In such a case, the cash remaining at the end of the current period is shown or written
as balanced carried down, followed by a balance brought down.

 The reimbursement of the amount spent in the current period is made on the 1st day of
the next month.

Example: Method 1 – Reimbursed at the beginning of the next month/period.

Prepare a petty cash book that has analysis columns for travelling, postage and stationery.
This is to be kept on an imprest system, the amount spent is to be reimbursed at the
beginning of the next month. The opening petty cash float is $1 500. The business makes all
payments of $300 or less out of its petty cash.

Petty Cash Book

DR CR (Analytical Columns)
Receipts F Date Details Voc. # Total Travelling Postage Stationery
Paid
$ 2023 $ $ $ $
1500 CB Oct 1 Cash
Oct 3 Stationery 1 150 150
Oct 5 Travelling 2 200 200
Oct 6 Travelling 3 100 100
Oct 11 Stationery 4 180 180
Oct 15 Postage 5 300 300
Oct 20 Travelling 6 120 120
Oct 22 Postage 7 250 ____ 250 ____
1300 420 550 330
_____ Oct 31 Balance c/d 200 GL GL GL
1 500 1 500

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 200 Nov 1 Balance b/d
1 300 CB Nov 1 Cash

Method 2 - Reimbursed at the end of the current period/month

2. Balancing off showing reimbursement at the end of the current period or the end of the
current month.

 In such a case, the amount of cash spend during the period is written first (on the
last day of the current month).

 The cash float or the original amount is written/shown as a balance carried down on
thelast day of the current month.

Example: Method 2 – Reimbursed at the end of the current period/month

Prepare a petty cash book that has analysis columns for travelling, postage and stationery.
This is to be kept on an imprest system, the amount spent is to be reimbursed at the last day
of current month. The opening petty cash float is $1 500. The business makes all payments
of $300 or less out of its petty cash.

Petty Cash Book

Dr Cr (Analysis Columns)
Receipt Fo Date Details Vouch Total Travelling Postage Stationery Ledger Ledger
No. Paid Folio Column
$ 2023 $ $ $ $
1500 CB Oct 1 Cash
Oct 3 Stationery 1 150 150
Oct 5 Travelling 2 200 200
Oct 6 Travelling 3 100 100
Oct 11 Stationery 4 180 180
Oct 15 Postage 5 300 300
Oct 20 Travelling 6 120 120
Oct 22 Postage 7 250 ____ 250 ____
1300 420 550 330
1 300 CB Oct 31 Cash GL GL GL
_____ Oct 31 Balance c/d 1500
2 800 2800
1 500 CB Nov 1 Balance b/d

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Method 1 - Reimbursed at the beginning of the next month/period

DR Cash Book (Cash column only) CR

$ 2023 $

Oct 1 Petty Cash PCB 1 500

Nov 1 Petty Cash PCB 1 300

General Ledger
DR Postage A/C CR

$ $
Oct 31 Petty Cash PCB 550

Method 2 - Reimbursed at the end of the current month

DR Cash Book (Cash column only) CR

$ 2023 $

Oct 1 Petty Cash PCB 1 500

Oct 31 Petty Cash PCB 1 300

General Ledger
DR Stationery A/C CR

$ $
Oct 31 Petty Cash PCB 330