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THE ANALYTICAL PETTY CASH BOOK AND THE IMPREST SYSTEM
The analytical petty cash book is a cash book created for recording small frequent cash payments in the operations of a business. In this cash book an analysis column is maintained for each expense heading. The total of each column is transferred to the debit of the appropriate ledger account at the end of the period or some other desirable interval. The following are its advantages:
(1) The handling and recording of small cash payments could be delegated to a junior staff known as petty cashier to save the main cashier from routine work.
(2) It would save the cash book and the ledgers from small frequent entries by reducing the number of entries, per period, to be made in them.
The Imprest System: This is a system in which the cashier gives enough cash to the petty cashier to meet the petty cash needs for the following period. At the end of the period or when the petty cash is almost exhausted, the petty cashier shall apply for reimbursement of an amount equal to the total amount disbursed. That regular amount maintained as petty cash is known as petty cash float.
Example:
The following is a summary of petty cash transactions of a business organization for the month of June 2014. The business maintains a petty cash float of N50,000.
N
June 1 Petty cash float given to the petty cashier –
3 Postages 2000
5 Transport fare 4,500
8 Cleaning materials 3,500
9 Stationery 1,700
14 Petrol for delivery van 8,800
16 Taxi fare 3,900
20 Postage 1,800
21 Disinfectant for cleaning toilet 2,800
23 Petrol for general manager’s car 6,600
24 Service of delivery van 4,000
28 Writing materials 3,100
30 Transport fare 1,200
You are required to rule up a petty cash book with columns for postages, transport and traveling, cleaning, stationery and motor expenses and enter the months transactions, the cashier being reimbursed on 30th June 2014 .
| Receipts
N |
Folio | Date | Details | Total
N |
Postages
N |
Transport & Traveling N | Cleaning
N |
Stationary
N |
Motor expenses
N |
| 50,000 | CB | 1/6/14 | Cash | – | |||||
| 3/6/14 | Postage | 2000 | 2000 | ||||||
| 5/6/14 | Trans. Fare | 4,500 | – | 4,500 | |||||
| 8/6/14 | Cleaning | 3,500 | – | – | 3,500 | ||||
| 9/6/14 | Stationery | 1,700 | – | – | – | 1,700 | |||
| 14/6/14 | Petrol for Del. Van | 8,800 | – | – | – | – | 8,800 | ||
| 16/6/14 | Taxi fare | 3,900 | – | 3,900 | – | ||||
| 20/6/14 | Postages | 1800 | 1,800 | – | – | ||||
| 21/6/14 | Disinfectant | 2,800 | – | – | 2,800 | ||||
| 23/6/14 | Petrol for G.M car | 6,600 | – | – | – | 6,600 | |||
| 24/6/14 | Service. For Del. Van | 4,000 | – | – | – | 4000 | |||
| 28/6/14 | Writing materials | 3,100 | – | – | – | 3,100 | – | ||
| 30/6/14 | Trans. Fare | 1,200 | – | 1,200 | – | – | |||
| Total | 43,900 | 3,800 | 9,600 | 6,300 | 4,800 | 19,400 | |||
| 43,900
93,900
50,000
|
CB | 30/6/14 | Cash
Bal c/d
Bal b/d |
50,000
93,900
|
- When a non-petty cash expense item is paid from petty cash, a column for that expense ledger account is created in the petty cash book for recording such expense.
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