I've started helping out with the books for a small company and have a question regarding petty cash.
It looks like the practice has been to take petty cash from cash payments made by customers. This practice seems to go against what I am learning on my book keeping course ! Would you advise that topping up petty cash should be done only by drawing a cheque and not by taking a small amount from a cash payment from a customer ?
Anyway, what's done is done. I am using Quickbooks. Is there a way to account for the removal of cash from the cash payments in QB? Eg a cash payment of £30 was received and needs to be entered into QB, but £10 has been removed for petty cash.
Can i split the deposit so that £20 is banked ? What sort of account would the remaining £10 go into?
Yes you need to receive a payment of 20 against the customer account and record deposit into bank account, then receive another payment of 10 against the customer and record the deposit into the petty cash account - presumably somewhere you will have a receipt to put as a payment in the petty cash account.
Clients have not read what they should and should not do - welcome to the real world of everyday book-keeping!!!
-- Edited by semsley on Monday 11th of July 2011 10:41:00 PM
As Sheila implied, it's not uncommon to come across this. From the point of view of the client, why should they pay for the cost of a cheque when there's cash readily available.
As long as you've got an audit trail, the client isn't doing anything wrong.
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
I was wondering, what class of account would you add ( onto the chart of accounts) for petty cash? I added a petty cash account as an expense account, but QB would not let me deposit the £10 fund into it; however, if I classed petty cash as an "other asset" account then the program did allow the deposit.
Also, a separate question. A cash payment looks to have gone missing. The cash payment was entered into quickbooks ( I have it in Undeposited Accounts currently) but the actual cash payment has been either misplaced, stolen, or there has been some sort of clerical error. Is there a simple way of accounting for this?
