Petty Cash Questions

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LizAA
Posts: 35
Joined: Wed Jan 25, 2017 2:14 pm

Petty Cash Questions

Post by LizAA »

Which of the following is correct? Or if neither, then what's better?

I have some cash which is used as petty cash (someone accumulated about $80 and has a paper ledger of the transactions). I want to include this into our accounting. I was thinking to do the following:
1) Created an asset account 01-1260 Petty Cash
2) Created a Contribution Fund 9000 Petty Cash with
DB 01-1260 and
CR 01-0110 (our checking account)
3) Add an entry through Contributions from "Cash offerings" to Fund 9000 for $80.

I am thinking that since I already have the cash, I don't need to "physically deposit" it into the bank and do a withdrawal...
If we need more petty cash later, I can instruct the counters to 'set aside' some cash offering and process it through fund 9000 instead of our Tithes fund 100 and depositing in the bank. Is this a valid way of doing things?
--------------------------------------------------------------------------------------
Alternatively:
1) Process the $80 cash through Contributions as Tithes
DB 01-0110 Checking
CR 01-4030 Tithes
BUT Keep the $80 cash aside (don't deposit at bank)
2) Write a manual check for $80 to the church
CR 01-1110 Checking
DB 01-1260 Petty cash
=============================================================
Whenever we use the Petty cash, it will be recorded as
CR 01-1260
DB expense account ex 01-6112 Coffee ministry

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Petty Cash Questions

Post by NeilZ »

LizAA wrote:Which of the following is correct? Or if neither, then what's better?

I have some cash which is used as petty cash (someone accumulated about $80 and has a paper ledger of the transactions). I want to include this into our accounting. I was thinking to do the following:
1) Created an asset account 01-1260 Petty Cash
2) Created a Contribution Fund 9000 Petty Cash with
DB 01-1260 and
CR 01-0110 (our checking account)
3) Add an entry through Contributions from "Cash offerings" to Fund 9000 for $80.

I am thinking that since I already have the cash, I don't need to "physically deposit" it into the bank and do a withdrawal...
If we need more petty cash later, I can instruct the counters to 'set aside' some cash offering and process it through fund 9000 instead of our Tithes fund 100 and depositing in the bank. Is this a valid way of doing things?
--------------------------------------------------------------------------------------
Alternatively:
1) Process the $80 cash through Contributions as Tithes
DB 01-0110 Checking
CR 01-4030 Tithes
BUT Keep the $80 cash aside (don't deposit at bank)
2) Write a manual check for $80 to the church
CR 01-1110 Checking
DB 01-1260 Petty cash
=============================================================
Whenever we use the Petty cash, it will be recorded as
CR 01-1260
DB expense account ex 01-6112 Coffee ministry

First off .. its always better to start a new topic as replying to a 10 year topic often gets lost. As far as Petty Cash is concerned, you SHOULD NOT use the Contributions module in any way, shape, or form. You do not 'set aside' anything from Contributions either, that is a recipe ripe for misuse.

Petty cash is usually cash that is held in the office for quick purchases, or reimbursements. That said, if you have to do quick purchases, its better to have a business credit card to handle that sort of stuff, one of the types that has many users, but all the transactions go to one statement which can then be traced and verified.

That said ... in this reply to another person I use the best thread I've found on how to setup a petty cash system. I would wait to start using it until you need to obtain some additional funds to replenish the Petty Cash.

viewtopic.php?f=3&t=13194&p=43082&hilit ... ash#p43082

The thread listed in that reply is the one I used to setup petty cash at my location.
Neil Zampella

Using PC+ since 1999.

LizAA
Posts: 35
Joined: Wed Jan 25, 2017 2:14 pm

Re: Petty Cash Questions

Post by LizAA »

Thanks for your speedy reply Neil.
Apologies about adding to an old thread. It seemed related so I just carried on. I may not have explained very clearly... I had read the couple threads you included above and thought I'd understood but obviously not.
I think I have two problems:
1) How to record this petty cash that I have inherited.
2) How do I replenish Petty Cash in the future, and can I do this without having to write a check to the church and cashing said check.
We already have a CC that is used for purchasing items.

Problem 1: When I took over the books a couple years ago there was a cashbox with some cash which was not processed through PCH as far as I know. I haven't used the monies other than to take and replace $30 for cash events (i.e. use $30 at the start of an event for change and then replace the $30 at the end of the evening). Any income generated from an event goes through contributions or A/R.
I want to set it up in Powerchurch so that I can use it to reimburse for less than $10 and not have to write a check; or a $5 emergency purchase (this happens maybe once in six months).

I am now trying to figure out how to put this on the books. I have created an asset account 01-0260-000 Petty Cash. Shd I just make a journal entry in fund accounting as per the thread to which you referred? If so, what's my Income account? I have $80 in a cashbox that is supposed to be Petty Cash... and how will it show on my balance sheet?
So GE in Funds Accounting and keep the cash in the cashbox?
CR 01-4260 Miscellaneous income accnt or 01-1110 (Checking account?)
DB 01-1260-000 Petty Cash

Problem 2) It seems crazy to have to physically deposit cash to the bank and then physically write a check and have to cash it, to replenish the petty cashbox...even though it would only be done once in a blue moon... [Could I have the contribution fund 900 be DB 01-1260 Petty Cash and CR 01-4260 Misc Income and keep the cash instead of depositing to the bank?... but my deposit slip would be incorrect??.. ugh]

-----------------------------------------------------------------------------------------------------------------

Would the following be correct when any petty cash is used? Record a manual check entry of
CR 1260-000 petty cash
DB expense account eg Ofce (for stamps)

Thanks for your insight.

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Petty Cash Questions

Post by NeilZ »

LizAA wrote:Thanks for your speedy reply Neil.
Apologies about adding to an old thread. It seemed related so I just carried on. I may not have explained very clearly... I had read the couple threads you included above and thought I'd understood but obviously not.
I think I have two problems:
1) How to record this petty cash that I have inherited.
I've been thinking about this and there's really not an easy way to do this, outside of creating an Out Of Balance (OOB) transaction n funds accounting. You would enter OOB (the letter 'O' not a zero) in the ref/check number block, and enter the DB account line to 'charge' the petty case account:

01-1260-000 DB Petty Cash 80.00

Save the transaction and post it. Then run the CASH Management report to verify that the account was updated. FWIW .. this account should close to the standard Unrestricted Net Assets fund balance account.

2) How do I replenish Petty Cash in the future, and can I do this without having to write a check to the church and cashing said check.


You really do want to write the check and get it cashed. This becomes part of the audit trail, and is actually used to move the funds to the petty cash account.

The account lines would look like this:

01-1110-000 CR Checking 100.00
01-1210-000 DB Petty Cash 100.00

When you issue funds, you would enter a Manual Check using a VENDOR with the account line like this;

01-1210-000 CR Petty Cash 15.00
01-5231-000 DB Some Exp 15.00
We already have a CC that is used for purchasing items.
You should also track the credit card in powerchurch.
I am now trying to figure out how to put this on the books. I have created an asset account 01-0260-000 Petty Cash. Shd I just make a journal entry in fund accounting as per the thread to which you referred? If so, what's my Income account? I have $80 in a cashbox that is supposed to be Petty Cash... and how will it show on my balance sheet?
So GE in Funds Accounting and keep the cash in the cashbox?
CR 01-4260 Miscellaneous income accnt or 01-1110 (Checking account?)
DB 01-1260-000 Petty Cash
Again, this is NOT the way to do it.
Problem 2) It seems crazy to have to physically deposit cash to the bank and then physically write a check and have to cash it, to replenish the petty cashbox...even though it would only be done once in a blue moon... [Could I have the contribution fund 900 be DB 01-1260 Petty Cash and CR 01-4260 Misc Income and keep the cash instead of depositing to the bank?... but my deposit slip would be incorrect??.. ugh]
You answered your own question ... you WANT to deposit everything coming in through Contributions without any 'draws' from these funds. This protects you as well as the counters from accusations of fraud or theft. Removing funds from the Deposit for use in Petty Cash would involve changing the transaction coming from Contributions to account for the petty cash removed,. Again, this would raise a red flag for someone doing an audit.

It may seem inconvenient to have a cash a check to replenish petty cash, but again, this protects you as there is an audit trail showing that funds are coming out of checking, where the check would be written to YOU to cash for the petty cash box, and the accounts information showing the funds moving from checking to petty cash.

Does this help?
Neil Zampella

Using PC+ since 1999.

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