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Accounting for Cash Payments

Accounting for Cash Payments. Electronic payments. Payments made over the internet. Post dated payments: payments to be made in advance to be applied for a future (specific) date. Petty Cash .

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Accounting for Cash Payments

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  1. Accounting for Cash Payments

  2. Electronic payments • Payments made over the internet. • Post dated payments: payments to be made in advance to be applied for a future (specific) date.

  3. Petty Cash • Petty cash fund is a small quantity of cash (usually no more than $200) that is kept in the office for small expenditures. • Examples: Parcel delivery charges, custodian needs some electrical fuses.

  4. Establishing a Petty Cash Fund • A cheque is issued and given to person selected to be in charge of petty cash. • The person cashes the cheque and brings the money and brings it back to the office to be kept in a metal cash box (locked). • This is know as the imprest system. • Accounting entry

  5. Operating the Petty Cash Fund • The keeper of the petty cash fund is authorised to make small payments out of the fund as necessary. • Every amount paid out of the fund must be replaced by a bill or voucher (see page 393, figure 10.12) for the expenditure. • At any time the total of the bills, vouchers and cash in the petty cash box should be equal to the amount of the petty cash fund.

  6. Replenishing the Petty Cash Fund • A minimum dollar amount is placed on the fund and the fund is replenished when that amount is reached. • For example: a petty cash fund of $100 with a minimum amount of $10. • The content of the petty cash box are: • Cash $5.11 • Bills and vouchers 94.89 $100.00

  7. The bills and vouchers contained in the petty cash box are the following

  8. Steps for replenishing the petty cash fund • Keeper of the fund prepares a summary of account of the charges from the bills and vouchers in the box.

  9. Steps for replenishing the petty cash fund

  10. Steps for replenishing the petty cash fund • The petty cashier submits the summary, together with the bills and vouchers, to person or department that issues cheques. • A cheque is made out to Petty Cash for an amount equal to the total on the summary ($94.89), is given in exchange for the vouchers. • The cheque is cashed by the petty cashier and the money is added to the total the petty cash box. • An accounting entry must be made for the cheque that was issued to replenish the petty cash.

  11. Steps for replenishing the petty cash fund • Accounting entry

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