Petty Cash

Fund (PCF)

Petty Cash Fund (PCF)

-money set aside to pay small
expenses which cannot be
paid conveniently by means
of check
2 methods of handling PCF:
Imprest fund system
Fluctuating fund system
l

Fluctuating Fund System

-checks drawn to replenish the fund do not
necessarily
equal
the
petty
cash
disbursements
-replenishment checks are simply drawn upon
the request of the petty cash cashier
-petty cash disbursements are immediately
recorded in contradiction with the imprest
fund system where the disbursements are
recorded upon the replenishment of the fund

 Imprest Fund
System

To establish the fund

PCF

Cash in Bank

Payment of expenses out of

the fund

xxx
xxx

No entry

Replenishment of the petty

cash payments

Expenses
xxx
Cash in Bank
xxx

Adjusting entry at the end of

acctg period for
unreplenished expenses

Expenses
PCF

Increase in PCF

PCF
Cash in bank

xxx

Cash in Bank
PCF

xxx
xxx

Decrease in PCF

xxx

Fluctuating Fund
System

PCF
Cash in Bank

xxx
xxx

Expenses
PCF

xxx

PCF
Cash in bank

xxx

xxx

xxx

No entry
xxx

xxx

PCF
Cash in bank

xxx
xxx

Cash in Bank
PCF

xxx
xxx

 Illustration Imprest Fund System

Nov10 The entity established an imprest fund of P10,000
Petty Cash Fund
Cash in Bank

10,000

10,000

Nov29 Replenished the fund. The petty cash items include

the following: currency and coin, 2,000;
supplies, 5,000; Telephone, 1,800; postage, 1,200
Supplies
Telephone
Postage
Cash in bank

5,000
1,800
1,200

8,000

 Illustration Imprest Fund System

Dec31 The fund was not replenished. The fund is composed
of the ff: currency and coin, P7,000;
supplies,
P1,500;
postage, P500; miscellaneous
expense,
P1,000.
Supplies
Postage
Miscellaneous expense
Petty Cash Fund
Jan1

1,500
500
1,000

3,000

The adjustment on Dec 31 is reversed

Petty Cash Fund
3,000
Supplies
1,500
Postage
500
Miscellaneous Expense
1,000
If no reversal is made, NO ENTRY

 Illustration Imprest Fund System

Feb22 The fund is replenished and increased to P15,000.
The
fund is composed of the ff: currency and coin,
P1,000;
supplies, P4,500; postage, P3,000;
miscellaneous
expense, P1,500.
Petty Cash Fund
Supplies
Postage
Miscellaneous expense
Cash in Bank

5,000
4,500
3,000
1,500

14,000

If no reversal was made on January, entry is:

Petty Cash Fund
Supplies
Postage
Miscellaneous expense
Cash in Bank

8,000
3,000
2,500
500

14,000

 Illustration Fluctuating Fund System

Nov10 The entity established a petty cash fund of
P10,000
Petty Cash Fund
Cash in Bank

10,000
10,000

Nov11-28 Petty cash disbursements amounted to P8,000

Expenses
8,000
Petty Cash Fund
8,000
Nov29 Issued a check for P10,000 to replenish the fund
Petty Cash Fund
Cash in Bank

10,000
10,000

 Illustration Fluctuating Fund System

Dec1-30 Petty cash expenses amounted to P9,000
Expenses
9,000
Petty Cash Fund
9,000
Dec31 Issued a check for P15,000 to replenish the fund
Petty Cash Fund
Cash in Bank

15,000
15,000

Solution

Coins and currency

Check drawn by the entity to the order

of the petty cash custodian

3,300

2,700
6,000

End