There are often several cash accounts because they serve different purposes. The Cash in Bank account represents the checking account that processes deposits, checks and memorandum items. The Cash Short and Over account is used to record any variance by sales clerks. The Cash on Hand Fund is used to provide change to conduct business with customers. The Petty Cash Fund is used to pay for small items with cash. Each of these cash accounts needs to be strictly controlled to prevent mishandling.
| Setting up petty cash fund | Journal entry | ||
| Debit | Credit | ||
| Petty cash | $150 | ||
| Cash | $150 | ||
The accounting assistant brought the following receipts and accepted $ 40 to replenish the petty cash fund.
Receipts
Repairs to tables $ 15
Delivery to customers $ 25
| Replenishment of petty cash fund | Journal entry | ||
| Debit | Credit | ||
| Repairs and maintenance | $15 | ||
| Delivery expense | $25 | ||
| Cash | $40 |
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