Let's assume that Company X has a petty cash fund of $100 and Mary is the company's employee responsible for handling the petty cash transactions. At all times Mary should have $100 in some combination of cash and petty cash vouchers (receipts). Let's assume that Mary has $20.00 in cash and she has petty cash vouchers of $79.70. She knows that $20.00 is too little cash to have on hand. As a result she will request that a check be written from the company's regular checking account in the amount of $80 ($100.00 that is reported in the Petty Cash account minus the $20.00 that is actually on hand.) The replenishment means the cash in the custodian's possession will be returned to $100, even if the vouchers do not equal the amount needed ($80 in this example). The small difference will be expensed along with the amounts shown in the vouchers.
It is important to point out that the $80 check will be credited to Cash (the company's checking account). No entry will be made to the Petty Cash account.
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