User Support Forum

Our church uses two funds, the general fund (Fund 01) and a "restricted" fund (Fund 20). The restricted fund is what may be called "set-asides," as in "Hey, let's set aside some money for a parking lot." These are church-restricted buckets that we track in a separate fund.

The question is, how do we properly handle a petty cash transaction? The petty cash asset account was created at setup and the starting balance was debited as general fund.

It's easy if it's all in the general fund.
To spend petty cash:
CR 01-petty-cash
DB 01-expense-account

To replenish petty cash:
CR 01-checking
DB 01-petty-cash

But what if the expense was for one of the church-restricted accounts? Doesn't there need to be a transfer somewhere? Or would the following be correct (it doesn't seem right)?
To spend petty cash:
CR 01-petty-cash
DB 20-expense-account

And then to replenish:
CR 01-checking
DB 01-petty-cash

Pops wrote:

But what if the expense was for one of the church-restricted accounts? Doesn't there need to be a transfer somewhere? Or would the following be correct (it doesn't seem right)?
To spend petty cash:
CR 01-petty-cash
DB 20-expense-account

And then to replenish:
CR 01-checking
DB 01-petty-cash

You should have a separate petty cash account for that fund, along with a 20-checking account. You can use the same bank checking account in 01 and 20, they will both come together when doing the bank reconciliation, but you can then track the money programmatically.

Thanks. I thought that might be the answer. That is how we have the checking account set up. For some reason we just didn't do the petty cash when we set up at the beginning of the year, and there hasn't been any activity in petty cash since then.

To spend petty cash:
CR 01-petty-cash
DB 20-expense-account

Just want to make something clear. Don't do this!

You have to CR and DB the same fund in a single transaction.

Where this will show up, if done incorrectly, is on your Balance Sheet. Your Assets (in 01, for example) will not equal your Liabilities+Equity.

I gotcha. As I said in the op, it didn't look right. Thanks.