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:
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Office supplies: $120
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Postage: $50
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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.
