Petty cash replenishment definition
/What is Petty Cash Replenishment?
Petty cash replenishment occurs when funds are added to a petty cash box. The amount of the replenishment should be sufficient to bring the cash balance of the cash box back up to its designated balance. For example, if the designated balance of a petty cash box is $300 and its current balance is $120, then the replenishment should be for $180.
Replenishment is required periodically, as cash payments from the petty cash box are used to pay for incidental expenses. When there are many payments from petty cash, more replenishments will be required.
A replenishment transaction is initiated by the petty cash custodian, who requests it from the accounting department.
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Example of a Petty Cash Replenishment
Sunshine Office Solutions maintains a petty cash fund with a designated balance of $500 to cover small office expenses such as coffee, postage, and minor office supplies. Over the past month, employees used petty cash to pay for the following expenses:
Office supplies: $120
Postage: $50
Coffee and snacks: $80
At the end of the month, the petty cash custodian reviews the receipts and finds that $250 has been spent, leaving only $250 in cash remaining in the petty cash box. To replenish the fund, the custodian submits the receipts and a replenishment request to the accounting department. The accounting department issues a check for $250, bringing the petty cash fund back to its original balance of $500. The replenishment is recorded in the company’s accounting system by debiting the appropriate expense accounts (Office Supplies, Postage, and Employee Refreshments) and crediting the Cash account.