CASH AND

CASH EQUIVALENTS –
PETTY CASH FUND
FAR 2 • AY 2022-2023, 1ST SEM
IMPREST SYSTEM

A system of control in managing company cash which involves

two major aspects:
• Cash receipts should be deposited in the bank; and
• Cash disbursements should only be in check.
PETTY CASH FUND

Due to impracticability of preparing check in relation to small

amounts of disbursements, a fund is established to cover these
petty expenses. This fund is called PETTY CASH FUND. This fund
is handled by a petty cash custodian. This fund is handled in
these two methods:
1. Imprest Fund System
2. Fluctuating Fund System
IMPREST FUND SYSTEM

This is the typical system used by companies. Under this system,

petty cash fund account is updated during (a) establishment, (b)
replenishment, (c) increase/ decrease in established balance,
and (d) recognition of unreplenished disbursement every end of
the period. Daily disbursement is not reflected in the said
account until replenishment or end of the period, whichever
comes first.
FLUCTUATING FUND SYSTEM

This system shows ‘fluctuating’ balance of the petty cash fund

account, meaning, effect of every transaction that affects the
said account is reflected during the period.
JAN. 1 – ABC COMPANY ESTABLISHED P 15,000 OF PETTY
CASH FUND.

IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM

PCF 15,000 PCF 15,000
CASH IN BANK 15,000 CASH IN BANK 15,000

*PCF – PETTY CASH FUND

JAN. 15 – PETTY CASH DISBURSEMENTS WORTH P 7,000
ARE AS FOLLOWS: (A) POSTAGE – P 600; (B) SUPPLIES – P
3,000; (C) TRANSPORTATION – P 1,800; (D) – DEPOSIT FOR
CASES OF SOFTDRINKS – P 200; (E) REPAIRS – P 400; (F)
IOUS FROM EMPLOYEES – P 1,000.
IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM
POSTAL EXPENSE 600
SUPPLIES 3,000
TRANSPORTATION 1,800
NO ENTRY REC. FROM VENDOR 200
REPAIRS 400
ADV. TO EMPLOYEES 1,000
PCF 7,000
JAN. 20 – PETTY CASH DISBURSEMENTS WORTH P 3,300
ARE AS FOLLOWS: (A) GASOLINE – P 1,800; (B) SUPPLIES – P
600; (C) EMPLOYEE’S POSTDATED CHECK (NOT INCLUDED IN
THE IOUS LAST JAN. 15) – P 900
IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM
TRANSPORTATION 1,800
SUPPLIES 600
NO ENTRY
ADV. TO EMPLOYEES 900
PCF 3,300
JAN. 31 – NO REPLENISHMENT IS DONE; NO FURTHER
PETTY CASH DISBURSEMENT IS MADE. (ASSUMING
ACCOUNTING PERIOD IS 1 MONTH ONLY).
IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM
POSTAGE 600
SUPPLIES 3,600
TRANSPORTATION 3,600
REC. FROM VENDOR 200 NO ENTRY
REPAIRS 400
ADV. TO EMPLOYEES 1,900
PCF 10,300
FEB. 5 – A REPLENISHMENT IS DONE ISSUING A CHECK TO
COVER ALL PETTY CASH DISBURSEMENTS IN JAN.
IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM
PCF 10,300 PCF 10,300
CASH IN BANK 10,300 CASH IN BANK 10,300
FEB. 6 – REFUNDABLE DEPOSIT FROM JAN. 15 IS
COLLECTED.

IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM

CASH 200 CASH 200
REC. FROM VENDOR 200 REC. FROM VENDOR 200
FEB. 7 – POSTDATED CHECK OF EMPLOYEE IS ENCASHED.

IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM

CASH 900 CASH 900
ADV. TO EMPLOYEES 900 ADV. TO EMPLOYEES 900
FEB. 15 – EXAMINATION OF THE CASH FUND DISCLOSED
THE FOLLOWING: BILLS AND COINS – P 1,000; PETTY CASH
VOUCHERS WORTH P 14,000 COMPRISING OF
TRANSPORTATION – P 12,000 AND SUPPLIES- P 2,000.
REPLENISHMENT CHECK IS ISSUED ON THE SAME DAY.
IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM
TRANSPORTATION 12,000 TRANSPORTATION 12,000
SUPPLIES 2,000 SUPPLIES 2,000
CASH IN BANK 14,000 CASH IN BANK 14,000
FEB. 28 – COMPOSITION OF THE FUND AT THE EOM SHOWS
THE FF: CURRENCY AND COINS – P 2,000; PETTY CASH
VOUCHERS WORTH P 13,000 PERTAINING TO: PAYMENT TO
SUPPLIERS – 8,000; ADMIN. EXPENSES – 4,000; MISC. EXP –
1,000; ALSO FOUND IN THE DRAWER OF PETTY CASH IS A
SEALED ENVELOPE WITH P 3,000 WORTH OF MONEY
LABELLED AS “EMPLOYEE PALUWAGAN”. REPLENISHMENT
IS EXCUTED WHILE ALSO INCREASING THE IMPREST
BALANCE TO P 20,000.
IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM
PCF 5,000 PCF 5,000
Operating Exp. 8,000 Operating Exp. 8,000
ADMIN. EXP. 4,000 ADMIN. EXP. 4,000
MISC. EXP. 1,000 MISC. EXP. 1,000
CASH IN BANK 18,000 CASH IN BANK 18,000
MAR. 15 – EXAMINATION OF THE CASH FUND DISCLOSED
THE FOLLOWING: BILLS AND COINS – P 14,000;
MEMORANDAS SHOWING EXPENDITURES FROM MAR. 1-
15 AMOUNTING TO P 6,000 NAMELY: ADMIN EXP – 3,000;
SELLING EXP – 2,500; MISC. EXP – 500.
IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM
ADMIN EXP. 3,000
SELLING EXP. 2,500
NO ENTRY
MISC. EXP. 500
PCF 6,000
MAR. 31 – EXAMINATION OF THE CASH FUND DISCLOSED
THE FOLLOWING: BILLS AND COINS – P 3,000; CHECK IN
THE ORDER OF PETTY CASH CUSTODIAN WORTH P 6,000;
MEMORANDAS SHOWING EXPENDITURES SINCE MAR. 1
AMOUNTING TO P 11,000 NAMELY: ADMIN EXP – 6,500;
SELLING EXP – 3,700; MISC. EXP – 800. REPLENISHMENT IS
EXECUTED, THOUGH, IMPREST BALANCE IS REDUCED TO P
12,000.
IMPREST FUND SYSTEM FLUCTUATING FUND SYSTEM
ADMIN EXP. 6,500 ADMIN EXP. 3,500
SELLING EXP. 3,700 SELLING EXP. 1,200
MISC. EXP. 800 MISC. EXP. 300
CASH IN BANK 3,000 CASH IN BANK 3,000
PCF 8,000 PCF 2,000
APR. 30 ASSUMPTION 1 – EXAMINATION OF THE CASH
FUND DISCLOSED THE FOLLOWING: BILLS AND COINS – P
4,000; MEMORANDAS SHOWING EXPENDITURES
AMOUNTING TO P 7,000. NO REPLENISHMENT IS DONE.
UNDER BOTH SYSTEMS, ENTRY WOULD BE:
CASH SHORTAGE/ OVERAGE 1,000
EXPENSES 7,000
PETTY CASH FUND 8,000
APR. 30 ASSUMPTION 2 – EXAMINATION OF THE CASH
FUND DISCLOSED THE FOLLOWING: BILLS AND COINS – P
4,000; MEMORANDAS SHOWING EXPENDITURES
AMOUNTING TO P 9,000. NO REPLENISHMENT IS DONE.
UNDER BOTH SYSTEMS, ENTRY WOULD BE:
EXPENSES 9,000
PETTY CASH FUND 8,000
CASH SHORTAGE/ OVERAGE 1,000
PROBLEM II
COMPUTE FOR:
(1) PETTY CASH ACCOUNTED
(2) PETTY CASH ACCOUNTABILITIES
(3) PETTY CASH OVERAGE/ (SHORTAGE)
(4) ADJUSTED PETTY CASH FUND BALANCE AS OF
DECEMBER 31, 2021
(5) AMOUNT TO BE REPLENISHED
PROBLEM II
YOU ARE EXAMINING THE ACCOUNTS OF DEF COMPANY.
YOUR COUNT OF THE IMPREST CASH FUND, MADE AT
JANUARY 4, 2022, IN THE PRESENCE OF THE PETTY CASH
CASHIER/CUSTODIAN, REVEALED THE FOLLOWING:
COINS AND CURRENCIES
QUANTITY DENOMINATION TOTAL AMOUNT
3 1,000 3,000
7 500 3,500
1 200 200
5 100 500
2 50 100
5 20 100
48 10 480
20 5 100
20 1 20
TOTAL 8,000
COINS AND CURRENCIES

This will be part of both (1) petty cash accounted and

(4) adjusted petty cash fund balance.
CHECKS

MAKER CHECK DATE PAYEE AMOUNT

JJJ, DEF’S
12/21/2021 DEF COMPANY 1,000
EMPLOYEE
PCF CUSTODIAN 12/15/2021 DEF COMPANY 500
TOTAL 1,500
CHECKS

Both checks will be part of (1) petty cash accounted.

However, only the check from JJJ will be part of (4)
adjusted petty cash fund. This is because the check
from PCF custodian is NSF.
UNREIMBURSED VOUCHERS
PAYEE DATE PARTICULARS AMOUNT
GGG, DEF’S ADVANCES TO
12/12/2021 1,000
EMPLOYEE EMPLOYEES
AAA BOOKSTORE 12/15/2021 OFFICE SUPPLIES 600
TAXI FARE – OR
N/A 12/16/2021 300
NO. 155
ZZZ GASOLINE GASOLINE – OR
12/19/2021 1,500
STATION NO. 688
BBB, DEF’S
12/23/2021 EMPLOYEE IOU 100
EMPLOYEE
TOTAL 3,500
UNREIMBURSED VOUCHERS

All the listed unreimbursed vouchers will be part of

(1) petty cash accounted.
ADDITIONAL INFORMATION

The balance of the petty cash fund per books is P

18,000.

This will be part of (2) petty cash accountabilities.

CASE (A)
(1) Petty Cash Accounted – all items listed in the original
data – 13,000 = 8,000 coins and currencies + 1,500
checks + 3,500 unreimbursed vouchers.
(2) Petty Cash Accountabilities – only the additional
information, that is, petty cash fund per book = 18,000
(3) Petty Cash Overage / (Shortage) – (1) minus (2) =
13,000 – 18,000 = (5,000)
(4) Adjusted PCF – Coins and currencies of 8,000 + Check
from JJJ of 1,000 = 9,000
(5) Replenishment – Imprest Balance of 18,000 –
Adjusted PCF of 9,000 = 9,000
CASE (B) - CHECKS
MAKER CHECK DATE PAYEE AMOUNT
A JJJ, DEF’S EMPLOYEE 12/21/2021 DEF COMPANY 1,000
B PCF CUSTODIAN 12/15/2021 DEF COMPANY 500
C PCF Custodian 02/15/2021 DEF Company 400
D XYZ, Customer 12/15/2021 DEF Company 1,600
E AG, DEF’s Employee 12/01/2021 DEF Company 700
F DEF Company 12/18/2021 PCF Custodian 5,500
MMM, Utility
G DEF Company 12/27/2021 1,600
Company
H ZY, DEF’s Employee 01/08/2022 DEF Company 600
TOTAL 11,900
CASE (B)

For Checks:
Items A and B are from the original data. Items C to H,
totaling P 10,400, are assumed items on checks under
case B. Overall, P 1,500 of A and B + P 10,400 of C to H = P
11,900. All of these are considered part of (1) Petty Cash
Accounted. Also, observation is provided for the following
items:
Item C – This a stale check payable to the entity. Aside
from (1), this is counted under (3) PCF Accountabilities.
CASE (B)

For Checks:
Item D – This is a customer check, meaning, a collection,
which should not be in PCF, thus, this is counted under (3)
PCF Accountabilities.
Item E – This is an employee check payable to the entity.
This is counted under (4) Adjusted PCF.
CASE (B)

For Checks:
Item F – This is an accommodation check. This is counted
under (4) Adjusted PCF.
Item G – This is a disbursement check which should not be
in PCF, thus, this is counted under (3) PCF Accountabilities.
Item H – This is a postdated check payable to entity. It is
only a part of (1) even though it is postdated.
CASE (B)

(1) Petty Cash Accounted – all items listed in the original

data plus additional items on checks – 23,400 = 8,000
coins and currencies + 11,900 checks + 3,500
unreimbursed vouchers.
(2) Petty Cash Accountabilities – petty cash fund per book
of 18,000 + Check Item C of 400 + Check Item D of
1,600 + Check Item G of 1,600 = 21,600
(3) Petty Cash Overage / (Shortage) – (1) minus (2) =
23,400 – 21,600 = 1,800
CASE (B)

4. Adjusted PCF – Coins and currencies of 8,000 + Check

from JJJ of 1,000 + Check Item E of 700 + Check Item F
of 5,500 = 15,200
5. Replenishment – Imprest Balance of 18,000 –
Adjusted PCF of 15,200 = 2,800
CASE (C)

Use the original data above and assume that two another
unreimbursed vouchers are present.
The first is under the payee VC Post Office last December
9, 2021, with particulars of postage amounting to P 500.
Unused stamp related to this is P 100.
The second is under the payee AAA Bookstore dated
January 2, 2022, with particulars of office supplies
amounting to P 2,500.
CASE (C)

First additional unreimbursed voucher:

The additional unreimbursed voucher from VC Post Office
worth P 500 is counted as part of (1) PCF Accounted. It is
to be noted that the P 100 unused stamp is no longer
counted under (1) because it is part of the P 500 voucher.
Nevertheless, if the P 500 voucher is not mentioned, the P
100 unused stamp will be counted in (1) instead.
CASE (C)

Second additional unreimbursed voucher:

The additional unreimbursed voucher from AAA Bookstore
worth P 2,500 is counted as part of (1) PCF Accounted.
Even though it is spent after December 31, 2021, it is still
part of (1) because it occurred before the PCF counting
date, that is, January 4, 2022. Though, because it is spent
after December 31, 2021, it is added back to (4) Adjusted
PCF.
CASE (C)

(1) Petty Cash Accounted – all items listed in the original

data plus additional items on unreimbursed voucher –
16,000 = 8,000 coins and currencies + 1,500 checks +
6,500 unreimbursed vouchers.
(2) Petty Cash Accountabilities – petty cash fund per book
= 18,000
(3) Petty Cash Overage / (Shortage) – (1) minus (2) =
16,000 – 18,000 = (2,000)
CASE (C)

4. Adjusted PCF – Coins and currencies of 8,000 + Check

from JJJ of 1,000 + Voucher from AAA of 2,500 =
11,500
5. Replenishment – Imprest Balance of 18,000 –
Adjusted PCF of 11,500 = 6,500
CASE (D)
Use the original data above and assume other items on
additional information.
An envelope with a sheet of paper with names of
employees together with contribution for a birthday gift of
a co-employee amounting to P 700 was also found in the
PCF storage. However, the said amount was not found
inside the envelope.
Also, the following employees’ pay envelopes have not
been opened and the money still intact, with each
envelope marked unclaimed: WW – 400; QA – 900.
CASE (D)

Additional information – contribution for birthday gift

Since the amount stated (P 700) is no longer found inside
the envelope, it is assumed that it already mixed up with
the coins and currencies. Though, this would be an
additional (2) PCF Accountabilities, a responsibility
handled by the PCF custodian. Furthermore, this should
be deducted in (4) Adjusted PCF.
CASE (D)

Additional information – unclaimed employee pay/salary

Since the amounts are still intact inside its envelope, both
P 400 and P 900 are part of (1) PCF accounted and (2) PCF
accountabilities.
CASE (D)

(1) Petty Cash Accounted – all items listed in the original

data plus unclaimed salary – 14,300 = 8,000 coins and
currencies + 1,500 checks + 3,500 unreimbursed
vouchers + P 1,300 unclaimed employee pay.
(2) Petty Cash Accountabilities – petty cash fund per book
of 18,000 + contribution for birthday gift of 700 +
unclaimed salary of 1,300 = 20,000
(3) Petty Cash Overage / (Shortage) – (1) minus (2) =
14,300 – 20,000 = (5,700)
CASE (D)

4. Adjusted PCF – Coins and currencies of 8,000 + Check

from JJJ of 1,000 – Contribution for birthday gift of
700 = 8,300
5. Replenishment – Imprest Balance of 18,000 –
Adjusted PCF of 8,300 = 9,700
CASE (E)
Use the original data above and assume that the following sale
invoices were found inside the PCF storage marked ‘collected’ and
signed by the PCF custodian:
Invoice Date Amount
142 12/28/2021 1,000
143 12/30/2021 900
144 12/31/2021 700
145 01/03/2022 500
Unfortunately, there was no segregated amount pertaining to
these invoices. Additionally, deposit slip dated January 2, 2022
amounting to P 1,900 was made. The amount deposited was
verified to be pertaining to these invoices.
CASE (E)
Analysis on sale invoices:
This should be part of (2) PCF Accountabilities because it is
inside the PCF storage but should not be part of PCF and
deducted to (4) Adjusted PCF.
Total amount from all 4 invoices is P 3,100.
Though, the amount to be included would simply be the
undeposited amount, that is, P 3,100 – P 1,900 = P 1,200.
This is not counted separately in (1) PCF Accounted since
the amount is not segregated from the coins and
currencies making us assume that it is mixed from the said
item.
CASE (E)

(1) Petty Cash Accounted – all items listed in the original

data – 13,000 = 8,000 coins and currencies + 1,500
checks + 3,500 unreimbursed vouchers.
(2) Petty Cash Accountabilities – petty cash fund per book
of 18,000 + undeposited collection of P 1,200 = 19,200
(3) Petty Cash Overage / (Shortage) – (1) minus (2) =
13,000 – 19,200 = (6,200)
CASE (E)

4. Adjusted PCF – Coins and currencies of 8,000 + Check

from JJJ of 1,000 – Undeposited Collection of P 1,200=
7,800
5. Replenishment – Imprest Balance of 18,000 –
Adjusted PCF of 7,800 = 10,200
END OF PRESENTATION
FAR 2 • AY 2022-2023, 1ST SEM