Accounting & Bookkeeping & Small Business Forum

[beanie]

Hi

I have taken up a course from home doing bookkeeping and I am struggling with the imprest system, I have set my petty cash book up okay and i am struggling with how the imprest works and what it should look like. :?
Can any one help me with this, a diagram of how it should be set out so I can get a idea of what it needs to look like.
Alternativley I can email someone what I have done so far and perhaps point me in the right direction :!:

Thanks in advance :D

[MCDeWing]

B~

Very easy. If this is a small business you establish your fund by first deciding how much you anticipate you'll need for cash on hand. Then:

DR- Petty Cash $XX
CR- Cash $XX

As small cash needs come up, for instance $10 worth of stamps, $5 worth of pens and paper, take the money out and buy the items. Return the purchase receipts, $10 & $5 respectively, back into the petty cash fund. When you reconcile your fund, the amount of the cash and coins plus the receipts should add up to the original $XX amount used to establish the fund.

To replenish your petty cash fund, you would debit the appropriate expense fund and credit cash for the reimbursing amount. Using the above example:

DR- Office Expense $5
DR- Postage Expense $10
CR- Cash $15

Then go to the bank and get the cash needed to bring your petty cash fund back to the established amount.

If this is a larger business, you establish/reconcile/replenish the fund in the same way however you might place more control over how money is taken out by establishing an authorization system that requires advanced approval and/or a signed voucher attached to the receipt.

Either way, it's sound policy to have one person responsible for petty cash, vs. an open door policy that allows any and everyone access to it.

[Richard Noot]

Marcia: I could NOT of said it better.

[MCDeWing]

Thanks, Richard! I'll take that as a compliment!

[Jennifer T]

Richard Noot wrote: Marcia: I could NOT of said it better.

I agree with Richard: well said! :D