THE ANALYTICAL PETTY CASH BOOK AND THE IMPREST SYSTEM

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 30^th 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.