OFFICE ADMINISTRATION TUTOR: MISS SHAVIA

TOPIC: PREPARING THE PETTY CASH RECORDS

2ND NOVEMBER,2020
THE IMPREST SYSTEM
The imprest system of petty cash is money set aside for petty cash purposes. A
fixed amount is given to the petty cashier say once a month and he/she records this
amount in the petty cash book. A record of all monies spent is also kept in the petty
cash book. This book is balanced at the end of the month and the main cashier
reimburses the petty cashier for the amount of petty cash spent.
For example, the main cashier gave the petty cashier $50 at the start of the month
and by the end of the month he/she has spent $43 then the main cashier will
reimburse $43. In other words, at no point in time should the petty cashier have
more than $50 in hand.
VOUCHERS
A voucher is a source document from which the petty cashier prepares the petty
cash book. Whenever any member of staff spends any petty cash voucher must be
completed and handed to the petty cahier as proof of the amount spent. An
example of a voucher is shown below:

A petty cash voucher

Preparation of the petty cash book/cash disbursements sheets
When the petty cashier receives the imprest from the main cashier this amount is
recorded on the left hand (debit) side of the petty cash book. All petty cash book is
recorded on the right hand (credit) side. The petty cash book is balanced the end of
the month to show the amount which has to be reimburse by the main cashier.

The diagram showing items that were entered in the petty cash book of J&R
Company Ltd during the month of march. The company used the imprest system
with analysis columns for stationery, postage, travelling, sundry expenses and
ledger.

.
Explanation
- On march 1 $100 was received from the cashier, this amount was posted to
the petty cash book as a receipt and is shown on the left hand side (debit).

- Between march 3 and 27 several payments/ disbursements were made. A

brief description of each payment was made in the details column, voucher
number noted, total amount listed and then posted to the appropriate analysis
column on the right hand side.

- At the end of the month balance the petty cash book. The total column was
summed up. At march 30 the figure of $89.90 shown in the total column
should be the same as the sum of the analysis columns. The analysis column
is totaled and closed off by putting a double underline under each total.
- As part of the balancing process, the total disbursements and the balance
carried (c/d) as summoned together. The figure of $100.00 shown should
correspond with the total of the receipt column- the figure being $100.00.

- The balance carried down (c/d) of $10.20 represents the amount left in the
petty cash at the end of the month. The amount is carried down at the end of
the period on the credit side of the petty cash book. However, it is the
brought down (b/d) figure shown at the beginning of the next period (1
April), on the debit side.

- On April 1 the cash $89.80 represents the cash provided by the cashier to
replace the amount spent and recorded on the petty cash vouchers to restore
the imprest. Hence in the details column next to the above mentioned figure
the petty cashier will write the words ‘imprest restored’.

Summary of expenses
The total of the analysis columns of the petty cash provides at a glance a
summary of the expenses that may be required for the reimbursement of
money to restore the imprest.
Stationery $15.50
Postage $25.00
Travelling $22.00
Sundry expenses $18.30
Ledger $9.00
Total $89.80
 Work this exercise
1. As a junior clerk in the accounts office you have been given the
responsibility of preparing and maintaining the petty cash book. You are
required to make the following entries in the petty cash book and restore
the imprest as at July 1, 2011 with analysis columns for postage,
travelling, sundry expenses and ledger.

- June 1 balance in fund is $5.17

- Cheque No 591 for $94.83 was received to replenish the fund.
- June 9 brought stamps $25.00 voucher no. 17
- June 12 paid taxi fare for messenger $7,00, voucher no 18
- June 15 sent a document registered mail $5.00, voucher no. 19
- June 21 paid $40,00 to Ms. Bynoe for painting of cupboards, voucher no. 20
- June 26 purchase coffee for office use $15.00 voucher no.21