The petty cash journal contains a summarization of the payments from a petty cash fund. The totals in the journal are then used as the basis for a journal entry into a company's general ledger. This journal entry lists petty cash expenditures by expense type.
A typical petty cash journal is a preprinted form, perhaps one purchased from an office supply store. From left to right, it typically contains a row in which to enter a voucher number, the voucher date, and the total amount of expenditure itemized on the voucher. The form then continues with a number of additional columns for common expenses, such as:
- Travel expenses
- Other expenses
The form may also contain a reconciliation block at the bottom, on which the petty cash custodian lists the standard petty cash balance, the amount of expenditures listed on the petty cash journal, and any cash shortages or overages that net to the actual cash balance remaining in the petty cash fund. The custodian should initial each completed voucher.
The procedure in which the petty cash journal is used is:
- At the end of the accounting period, enter all vouchers in the petty cash journal. For each voucher, enter the voucher number, date, total expenditure, and the type of expense.
- Enter the grand totals for all numerical columns at the bottom of the form.
- Complete the reconciliation block and state any petty cash shortages or overages.
- Staple all vouchers to the back of the journal.
- Forward the packet to the general ledger clerk.
- The general ledger clerk creates a journal entry that reduces the petty cash balance by the grand total expenditure listed at the bottom of the form, and records an expense for the various expenses on the form for which entries were made.
- The general ledger clerk forwards the journal to the cashier, who provides replenishment cash to the petty cash custodian, thereby restoring the petty cash balance to its original designated level.
After the usage period is complete, the petty cash journal is archived in accordance with a company's document destruction policy.