Petty Cash is an amount of cash on hand to buy small or last minute items. Petty Cash is also an asset on the Balance Sheet and has its own account in QuickBooks or other bookkeeping system.
To Start a Petty Cash Fund
- Establish a procedure for tracking and replenishing
- Determine amount to keep on hand ($100 - $200 is usually enough for a week or two)
- Keep the cash in a safe place – preferably locked
- Withdraw cash from the bank account
- Assign a person to be responsible for Petty Cash
For bookkeeping, it is a decrease in the Checking Account (credit) and a beginning balance in the Petty Cash Account (debit).
To Make a Purchase
- Fill out a Voucher describing the purchase to document approval for the use of the money.
- After the purchase, attach the sales receipt to the Voucher.
- Record the Voucher details in the Petty Cash Journal that summarize the purchases.
To Replenish Petty Cash
- Total the Vouchers in the Petty Cash Journal
- Withdraw money from the bank to cover draws
For bookkeeping, it is a decrease in the Checking Account (credit) and an increase in the expense accounts for the purchases (debit).
We've created a template for Vouchers and a Petty Cash Journal. We hope you find it helpful. If you have further questions, you can contact us below: