Replenishing a Petty Cash Fund
- The custodian must submit receipts to replenish the petty cash fund at least every 30 days. Petty cash funds that are replenished on a less frequent basis may be deemed to be excessive and subject to being reduced or eliminated. However, petty cash advances used solely for making change would not have receipts to submit.
- A Petty Cash Voucher (or a similar spreadsheet including Supplier, Description, Amount, and Worktag) should be completed for every transaction disbursed from the petty cash fund. Adequate documentation supporting each disbursement must be obtained by the custodian and submitted along with the Petty Cash Voucher.
- The Petty Cash Voucher must be totaled and signed by the custodian and the department chair (or designate). The total of the Petty Cash Voucher plus the cash on hand or in a university checking account must equal the amount of the funds advanced. Any discrepancy must be explained, and a request for a reimbursement of the shortage should be included on the Petty Cash Voucher.
- Replenishment of a petty cash fund can be either in cash or by check.
- For replenishment in cash, the custodian must complete an Ad Hoc Bank Transaction.
- For replenishment by check, the custodian must complete an Ad Hoc Payment.
- For either replenishment method, the document should be charged to the department’s Worktag, and attaching all supporting documentation. The Petty Cash Voucher is not required when attaching Research Participant Receipts forms as documentation.
- Any questions regarding the replenishment of petty cash funds should be directed to the Office of Compliance (294-5180).
This page was last updated on April 10, 2020.
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One of the most common mistakes made by small businesses is getting the method wrong for replenishing a petty cash account. It is often caused by misunderstanding the basics behind the transaction. With an understanding of the principles behind the transaction and a little practice, replenishing a petty cash fund will become routine.
A petty cash fund is a certain amount of cash that is kept in a separate location to pay for minor business expenses that periodically arise. Usually the fund is assigned to a single person who is responsible for securing the fund, disbursing cash as needed, and keeping records of transactions. The amount of cash kept in the fund depends on the nature of the business, as well as the amounts and frequency of transactions.
The original amount in the petty cash fund remains constant. As cash is disbursed from the fund, it must be periodically replenished to ensure sufficient cash remains in the fund to meet minor business expenses. Each time the fund is replenished, the amount of petty cash in the fund is restored to the original fund balance.
The custodian of the petty cash fund will monitor the fund balance on a regular basis. When the cash balance in the fund is low, the custodian prepares a request for replenishment check. Attached to this request are the receipts from the cash box for all expenditures made from the fund. The request will indicate the general ledger account where the expenses for each receipt are to be charged.
As a best practice, a standard format should be used for the petty cash replenishment report. A check is then written to the custodian of the petty cash fund in the amount of the expenses that were recorded in the general ledger as supported by the receipts. The custodian of the petty cash fund cashes the check and places the cash in the cash box. This action returns the balance in the petty cash fund to its original balance.
The most common mistake in trying to replenish a petty cash fund is debiting petty cash and crediting cash. This is incorrect and doesn't meet the replenish meaning in accounting. When you purchase small items such as postage and meals, you are depleting the cash in the box. When cash in the box becomes low, you must replenish the fund.
You accomplish that task by withdrawing more cash from the bank for the amount that has been depleted as shown on the receipts. You record the transaction by debiting individual accounts in the general ledger such as postage, meals, or mileage. You finalize the transaction by crediting the amount withdrawn from the bank to cash.
May 13, 2022 May 13, 2022/ Steven Bragg
Petty cash replenishment occurs when funds are added to a petty cash box. The amount of the replenishment should be sufficient to bring the cash balance of the cash box back up to its designated balance. Replenishment is required periodically, as cash payments from the petty cash box are used to pay for incidental expenses. A replenishment transaction is initiated by the petty cash custodian.
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May 13, 2022/ Steven Bragg/
Replenishing the petty cash fund means the petty cash custodian requests and receives cash from the company's regular checking account in an amount that will return the cash on hand to the amount shown in the general ledger account Petty Cash. Let's assume that a company has a petty cash fund of $100 and its general ledger account Petty Cash has a debit balance of $100. Mary is the petty cash custodian who is the only person handling the petty cash transactions. At all times Mary should have some combination of cash and petty cash vouchers (receipts) that are equal to $100. Next, let's assume that there is only $20.00 in cash remaining and Mary realizes that $20 is not sufficient. She needs to obtain a company check for $80 in order to cash it and return the cash amount to $100 (the amount shown in the Petty Cash account). The petty cash vouchers provide the documentation for the $80 check request. In the process Mary discovers that the vouchers add up to only $79. Mary will debit the accounts indicated on the petty cash vouchers and then debit Cash Short and Over for $1 (the amount that is not accounted for). It is important to realize that the $80 check will be credited to Cash (the company's checking account). There is no entry to the Petty Cash account when merely replenishing the petty cash.Example of Replenishing Petty Cash