![]() Hence, we usually net them off against each other by recording the cash over and short on the debit side for the cash shortage. In accounting, we usually have the cash over and short account to represent both cash overage and cash shortage as their amount is usually small. In this case, we can make the journal entry for petty cash replenishment with the cash shortage by recording the cash over and short account on the debit side instead, as below: Journal Entry Account On the other hand, we may see that there is a cash shortage instead when we make the reconciliation of petty cash funds to the petty cash receipts. Petty cash replenishment with cash shortage The cash over and short is usually recorded under the other revenues or other expenses on the income statement as its amount is usually very small. Likewise, we can make the journal entry for petty cash replenishment with the cash overage by debiting the expenses accounts and crediting the cash over and short account and the cash account. In this case, we need to also include the cash overage in our journal entry for the petty cash replenishment. Sometimes, there is a cash overage after we reconcile the fund remaining in the petty cash box to the petty cash receipts that represent all the expenses using the petty cash fund. Petty cash replenishment with cash overage ![]() ![]() It would be inefficient if we record those expenses with the petty cash account and then record another transaction to transfer that same amount from the cash account to the petty cash account.įor example, the journal entries below would be inefficient which is why we should cross out the petty cash account and combine them into one journal entry instead: Account Hence, it is more efficient to just record all those expenses with the cash account directly. This is due to, in accounting, after the petty cash fund is established by transferring a certain amount from the cash account to the petty cash account, the balance of the petty cash account usually stays the same throughout the accounting period.Īfter all, the petty cash expenses will only be recorded when we make petty replenishment. There is only a credit of the cash account. In this journal entry, there is no petty cash account involved. We can make the petty cash replenishment journal entry by debiting the expenses accounts and crediting the cash account for the petty cash expenses that we have so far. This is to ease the process of recording the accounting transactions and this usually works very well as long as there is proper petty cash control in place (e.g. In this case, all expenses using the petty cash are usually only be recorded to the accounting record when we make the petty cash replenishment journal entry after the petty cash fund reaches a certain level (i.e. After all, the petty cash fund is established in the first place in order to handle the small expenses that occur in our day-to-day operation. This is due to the petty cash expense is usually limited to only a certain amount that is deemed to be immaterial. However, when there is a petty cash outflow, we usually do not record it into the accounting record immediately. In accounting, we usually record the cash transaction immediately into our accounting record whether it is the cash inflow or the cash outflow from the company. Likewise, we need to make the petty cash replenishment journal entry in order to refill our petty cash box as well as to account for all the petty cash expenses that have occurred so far. In business, we usually need to replenish the petty cash fund when our petty cash box reaches a certain level of the fund or when it is about to be empty. ![]() ![]() Petty Cash Replenishment Journal Entry Introduction ![]()
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