General goal Recording the establishment of the fund Imprest Fund System Fluctuating Balance Maintaining the balance in | Updating the balance in the | the petty cash fund | petty cash fund account as account at all times equal to the initially established balance in the fund Petty cash fund xx Cashin bank _xx the amounts are and/or replenished used Petty cash fund xx Cashin bank x Recording the payments of expenses from the fund Memo entry on the fund register only Expenses XX Petty cash fund xx He Recording the Expenses XX Petty cash fund xx replenishment of the fund Cashin bank xx Cashin bank xx Recording of the increase Petty cash fund xx Petty cash fund xx in fund amount Cashin bank xx Cashin bank xx Recording of the decrease | Cash in bank XX Cash in bank XxX in fund amount Petty cash fund xx Petty cash fund_xx Adjusting the petty cash fund for unreplenished expenditures Expenses XX Petty cash fund xx No corresponding entry since the petty cash fund amount is always updated Optional reversing entry at the start of next period Petty cash fund xx Expenses XX pe: No corresponding entry since no adjusting entry was made| Date Particulars 12/09/23 P2,400 was paid from the fund for the transportation expenditures 12/12/23 _P5,000 was paid from the fund for the lunch treat of a prospective client 12Petty cash fund 3,200 12/15/23 The fund was replenished 12/18/23 P8,500 was paid from the fund for the purchase of some office supplies 12/20/23 The fund was replenished and increased to P15,000. 12/28/23 _ P3,200 was paid from the fund for the transportation expenditures Record these transactions using (a) imprest fund system and (b) fluctuating balance system. Date Imprest Fund System Fluctuating Balance 12/01/23 | Petty cash fund 12,000 Petty cash fund 12,000 /01/ Cash in bank 12,000 Cash in bank 12,000 12/09/23 | Memo entry on the fund register | 7” Opp askin an 12/12/23 | Memo entry on the fund register i pea ash fund's oe Transportation expense 2,400 12/15/23 | Representation expense 5,000 | ™ ae res : es Cash in bank 7,400 c Office supplies expense 8,500 12/18/23 | Memo entry on the fund register Petty cash fund 8,500 Office supplies expense 8,500 12/20/23 | Petty cash fund 3000 | Aare ; 11,500 Cash in bank 11,500 ‘ash in bary 11,500 J Transportation expense 3,200 12/28/23 | Memo entry on the fund register Petty cash fund 3.200 Adjusting entry: No corresponding entry since the 12/31/23 | Transportation expense 3,200 petty cash fund amount has already been updated. Note: Despite these differences in entries, the petty cash balance under each method is P11,800.PETTY CASH SHORT AND OVER Periodically, in irregular intervals, the amount of items accounted in a petty cash fund is compared with the initial established balance (i.e., accountability). In simple terms, the petty cash accounted items and petty cash accountability are compared as follows: Petty Cash Accounted Items | Petty Cash Accountability Comprise of the following: a. Coins and currencies Equal to the imprest balance of b. Accommodation check the petty cash fund. c._ Petty cash vouchers The accommodation is normally the petty cash custodian’s check representing his/her salary. To be included in the petty cash balance, the check shall not be post- dated.The amount of petty cash short or over shall be determined based on . a‘ 7 ‘ tl relationship between the amounts of accounted items and accountabil ty: he Scenario Accounting consequence Accounted items = accountability | No petty cash short or over Accounted items > accountability Petty cash overage Accounted items < accountability Petty cash shortage Illustration 8. During 2023, SANDY Company established petty cash fund for P20,000, to be accounted for using the imprest balance method. At the end of the year, the following items were found in the petty cash fund: Coins P800 Currency 3,000 Accommodation check (petty cash custodian’s paycheck) 8,000 Petty cash vouchers 7,800 Total accounted items P19,600 Since the P20,000 accountability is higher than the total of the accounted items of P19,600, there is a cash shortage of P400. The year-end adjustment can now be recorded as follows: Expenses 7,800 Cash shortage 400 Petty cash fund 8,200 After this entry, the petty cash fund balance to be included in the amount of cash and cash equivalents will now have a balance of P11,800 (P20,000 - P8200), composed of the followin Coins and currencies in the fund (P800 + P3,000) P3,800 Check of the petty cash custodian (ice., accommodation check) 8,000 Petty cash fund to be included in cash balance P11,800