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What is a Petty Cash Journal?

Petty Cash Journal

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Petty Cash Journal

A petty cash journal is a financial journal that is used to record transactions involving a company’s petty cash fund. The petty cash journal typically includes columns for the date of the transaction, the amount of the transaction, the purpose of the transaction, and the balance remaining in the petty cash fund. It provides a chronological record of all petty cash transactions.

When a petty cash fund is replenished, the expenses recorded in the petty cash journal are typically posted to the appropriate expense accounts in the company’s general ledger. This allows the company to keep track of its petty cash expenses and ensure they are included in the company’s financial statements.

For example, if a company has a petty cash fund of $200 and has recorded various small expenses for office supplies, postage, and staff meals in its petty cash journal, those expenses would be posted to the office supplies, postage, and meals and entertainment expense accounts, respectively, in the company’s general ledger when the petty cash fund is replenished.

Maintaining a petty cash journal helps a company to maintain control over its petty cash fund, prevent theft or misuse of the fund, and ensure that all petty cash transactions are recorded accurately in the company’s financial records.

Example of a Petty Cash Journal

Let’s consider an example of a Petty Cash Journal for ABC Company:

DateDetails/ParticularsAmountBalance
01/01/2023Initial petty cash fund$200
01/05/2023Office supplies$25$175
01/07/2023Coffee for staff meeting$15$160
01/14/2023Postage for mailings$20$140
01/20/2023Taxi fare for client visit$30$110
01/28/2023Replenish petty cash fund$200

From this petty cash journal, we can track all petty cash transactions for the month. At the start of the month, the petty cash fund had $200. Over the course of the month, $90 was spent on various expenses, leaving a balance of $110. At the end of the month, the petty cash fund was replenished, bringing the balance back up to $200.

When the petty cash fund is replenished, the transactions recorded in the petty cash journal would be posted to the company’s general ledger. In this example, the office supplies, coffee, postage, and taxi fare would be recorded as expenses, and the petty cash account would be reduced by $90.

By maintaining a petty cash journal, ABC Company can track all of its petty cash transactions, ensuring that the petty cash fund is used appropriately and that all transactions are recorded accurately in the company’s financial records.

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