1. Accounting 3 Chapter 18 Section 3

2. Petty Cash  A petty cash fund enables a business to pay cash for small expenses where it is not practical to write a check.  If the petty cash on hand is less than the amount recorded, the fund is Cash Short.  If the petty cash on hand is more than the amount recorded, the fund is Cash Over.  In order to determine the status of the fund a Petty Cash Report is prepared.  Visual steps on next slide.

3. Preparing a Petty Cash Report Petty Cash Report Date:Custodian: Explanation Fund Total ReconciliationReplenish Amount Payments: Less:Total Payments Equals:Recorded Amount on Hand Less:Actual Amount on Hand Equals:Cash Short (Over) Amount to Replenish February 28, 2007 Janice Morgan 250.00 Supplies 45.34 Advertising 25.00 Miscellaneous 44.22 114.56 135.44 133.85 1.59 116.15

4. Journalizing Cash Payments to Replenish a Petty Cash Fund  Journalizing petty cash has only changed from Accounting 1 and 2 in that you must now add the Cash Short and Over account.  If the fund was Cash Short, there will be a debit entry.  If the fund was Cash Over, there will be a credit entry.  Transaction and Visual steps on next slide.

5. March 31. Paid cash to replenish petty cash fund, $98.66: supplies, $32.33; repairs, $40.00; miscellaneous, $28.50; cash over, $2.17. Check No. 249. Cash Payments Journal Page ___ DateAccount Title Post Ref. GENERAL DEBITCREDIT Accts Pay Debit Purch. Disc. Credit Cash Credit Ck No. 6 Mar 31 Supplies 249 3 2 33 9 8 66 Repair Expense 4 0 00 Miscellaneous Expense 2 8 50 Cash Short and Over 2 17

6. Posting from a Cash Payments Journal  Individual entry posting is done first into the Accounts Payable and General Ledgers.  Special Column TOTALS posting is done second into the General Ledger.  The posting reference used for the cash payments journal is CP along with the page number.

7. Steps for Posting Cash Payments 1. Any entry that involves the General Debit and Credit columns need to be posted into their respective accounts in the General Ledger. 2. Any entry that involves a vendor name and the Accounts Payable Debit column should be posted into their respective vendor accounts in the Accounts Payable Ledger. *Do not forget to list the posting reference (account number) back on the Cash Payments Journal posting reference column when finished posting.

8. Steps for Posting Cash Payments (continued) 3. At the end of a fiscal period and when finished posting all individual amounts, the cash payments journal must be ruled and totaled. 4. Then the totals from the special amounts columns should be posted in their respective accounts in the General Journal.  An example of the posting will be shown with the Work Together Problem. *Do not forget to list the posting references (account numbers) below the respective special amount columns when finished posting.

9. Work Together p. 467 Cash Payments Journal Page ___ DateAccount Title Post Ref. GENERAL DEBITCREDIT Accts Pay Debit Purch. Disc. Credit Cash Credit Ck No. To see the posting for each entry, click on the posting references which are hyperlinked. The special column posting references should be looked at after everything is finished. May 4 Wilhem, Inc. 520390 3 5 9 0 00 31Supplies521 1140 4 7 45 1 4 5 15 Advertising Expense 6105 3 7 00 Miscellaneous Expense 6135 6 1 90 Cash Short and Over 6110 1 20 31 Totals 1 4 6 35 1 20 3 5 9 0 00 3 7 3 5 15 ( ) (2115) (1105) 5 Assignment

10. Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT General Ledger Cash 1105 May 1 Balance 9 7 2 1 60 31 CP5 3 7 3 5 15 5 9 8 6 45 Petty Cash 1110 May 1 Balance 2 0 0 00

11. Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT Supplies 1140 May 1 Balance 2 4 6 7 30 31 CP5 4 7 45 2 5 1 4 75 Accounts Payable2115 May 1 Balance 9 7 2 4 60 31 CP5 3 5 9 0 00 6 1 3 4 60 General Ledger

12. Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT Advertising Expense General Ledger 6105 May 1 Balance 1 4 9 7 60 31 CP5 3 7 00 1 5 3 4 60 Cash Short and Over 6110 May 1 Balance 3 10 31 CP5 1 20 1 90

13. Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT General Ledger Miscellaneous Expense6135 May 1 Balance 1 2 9 1 05 31 CP 5 6 1 90 1 3 5 2 95

14. AccountAcct No. DateItem Post Ref DebitCredit Balance Accounts Payable Ledger Wilhelm, Inc.390 May 1 Balance 3 5 9 0 00 4 CP5 3 5 9 0 00

15. Assignment  Do Application 18-3 and 18-4 by hand.  Turn it into Mrs. Middleton.  Move on to section 18-4.