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Petty Cash

What does replenishment amount mean?

Replenish means to return the amount of actual cash in the petty cash box back to the amount appearing in the general ledger account Petty Cash. A check is written on the company’s main checking account for the needed amount.

When your account reaches the low balance threshold, you may see a yellow light while driving through the toll lanes. That night, we will process a payment equal to your replenishment amount.

The petty cash account should be reconciled and replenished every month to ensure the account is balanced and any variances are accounted for. The accountant should write a check made out to “Petty Cash” for the amount of expenses paid for with the petty cash that month to bring the account back up to the original amount. The check should be cashed at the company’s bank and the cash placed back in the petty cash safe or lock box. Petty cash is a current asset and should be listed as a debit on the company balance sheet.

How can I change the credit card on my account?

Place the petty cash into the box and create an accounting journal to record petty cash transactions. Write the current date, “DR” (Debit) and “Petty Cash” at the top. Write the amount of the check you wrote for petty cash after this entry. Write “CR” (Credit) and “Petty Cash” next and write the same amount as the amount of cash you placed into the petty cash box. Most companies keep a small amount of cash on hand to pay minor business-related expenses that don’t warrant the writing of a check or use of the corporate credit card.

The transaction that replenishes the petty cash fund is recorded with a compound entry that debits all relevant asset or expense accounts and credits cash. Consider the journal entry below, which is made after the custodian requests $130 to replenish the petty cash fund and submits vouchers that fall into one of three categories.

A petty cash fund is a convenient method to pay for small business transactions such as postage, delivery fees or emergency office supplies. It is important to keep accurate records of all petty cash expenditures for bookkeeping purposes. As noted earlier, expenses are almost always debited, so we debit Wages Expense, increasing its account balance. Since your company did not yet pay its employees, the Cash account is not credited, instead, the credit is recorded in the liability account Wages Payable.

To initially fund a petty cash account, the accountant should write a check made out to “Petty Cash” for the desired amount of cash to keep on hand and then cash the check at the company’s bank. The journal entry on the balance sheet should list a debit to the business bank account and a credit to the petty cash account. When petty cash is used for business expenses, the appropriate expense account — such as office supplies or employee reimbursement — should be expensed. When you sign up for E-ZPass, you make an initial deposit into your E-ZPass account, using either cash or a credit card. As you drive through a toll lane, the E-ZPass sends toll data from the transponder to the main computer system, which deducts the toll amount from your account balance.

A check is written on the company’s main checking account for the needed amount. The petty cash vouchers (receipts, documentation) determine the general ledger accounts to be debited. Any difference in the amounts of debits and credits goes to the income statement account Cash Short and Over. Accounts receivable is an important aspect of a businesses’ fundamental analysis. Accounts receivable is a current asset so it measures a company’s liquidity or ability to cover short-term obligations without additional cash flows.

Essentially, the company has accepted a short-term IOU from its client. In accounting software, this entry will add the petty cash check to your print checks list. Using columnar paper with a debit, credit and balance column, enter the amount of petty cash in the debit column. When the fund requires more cash or at the end of an accounting period, the petty cash custodian requests a check for the difference between the cash on hand and the total assigned to the fund. At this time, the person who provides cash to the custodian should examine the vouchers to verify their legitimacy.

  • The petty cash account should be reconciled and replenished every month to ensure the account is balanced and any variances are accounted for.
  • The check should be cashed at the company’s bank and the cash placed back in the petty cash safe or lock box.

account replenishment

Accounts receivable refers to the outstanding invoices a company has or the money clients owe the company. The phrase refers to accounts a business has the right to receive because it has delivered a product or service. Accounts receivable, or receivables represent a line of credit extended by a company and normally have terms that require payments due within a relatively short time period. It typically ranges from a few days to a fiscal or calendar year. Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers.

Selecting automatic replenishment is the most convenient way to manage your E-ZPass account. As you use the toll roads, your available balance decreases.

The Petty Cash Fund

If you apply online, you will need to pay for your transponder and establish your account balance with a credit card. In 2017 there were 21.59 million E-ZPass accounts among the 16 states that use the electronic toll collection system. About 80 percent of drivers on the New Jersey Turnpike and Garden State Parkway pay their tolls with E-ZPass. Jersey drivers pay E-ZPass fees, which total $18 a year, even if they aren’t charged a single toll.

When the account balance drops below a pre-established level, you will see the “low balance” yellow light signal as you pass through a toll lane, rather than the typical “toll paid” green light. First report the lost card to the credit card issuing company.

Available Balance

Then, Login to your account and go to Update Personal Information, Add Credit Card Info and complete Option 1. If you continue to use your E-ZPass without replenishing a negative account balance, you will be charged the toll and an administrative fee. To permit these cash disbursements and still maintain adequate control over cash, companies frequently establish a petty cash fund of a round figure such as $100 or $500.

The same entry will include a credit to its liability account Notes Payable since that account balance is also increasing. Whether this is a good idea for you depends on where you live, where you drive, and whether your local highway system offers discounts on certain routes to holders of their own tag. Some states charge a monthly fee for the tag, but offer discounted tolls. For example, the tolls from my house to Consumer Reports headquarters run $11.80 if I pay cash, but $11.21 with an E-ZPass. That’s couch-cushion money at first glance, but adds up if you travel toll roads frequently.

Add a few long trips to your regular tolls and fees and it may be time to replenish the money in your account sooner than later. Replenish means to return the amount of actual cash in the petty cash box back to the amount appearing in the general ledger account Petty Cash. This is done whenever the amount of actual cash in the petty cash box is low and at the end of each accounting period.

Accounts receivables are listed on the balance sheet as a current asset. AR is any amount of money owed by customers for purchases made on credit. For example, if a company borrows cash from its local bank, the company will debit its asset account Cash since the company’s cash balance is increasing.

The petty cash account is a current asset and will have a normal debit balance (debit to increase and credit to decrease). Here is a video of the petty cash process and then we will review the steps in detail. Companies record accounts receivable as assets on their balance sheets since there is a legal obligation for the customer to pay the debt. Furthermore, accounts receivable are current assets, meaning the account balance is due from the debtor in one year or less. If a company has receivables, this means it has made a sale on credit but has yet to collect the money from the purchaser.

The replenishment amount is added to your available balance. If you did not select automatic replenishment when you opened your account, you can change to automatic replenishment at any time. Go to an E-ZPass® customer service center in your state to sign up or fill out an online application form.

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