Study Surgery

Q. I have problems balancing imprest and non-imprest petty cash, can you help?

A. If you run an imprest system, with an imprest balance of £100, you will first take £100 from the bank and place it in the petty cash tin:

Dr Petty Cash £100

Cr Cash at Bank £100

As you draw out cash to pay expenses, you put back in petty cash vouchers to the same amount. Therefore, at any time, there will always be £100 in the petty cash tin, made up of either cash or the value of the petty cash vouchers.

When you are running out of cash – say you only have £25 left – you will take out the £75 of vouchers and replace them with £75 from the bank.

To post the petty cash expenses incurred:

Dr Expenses £75

Cr Petty Cash £75

To post the cash withdrawn from the bank

Dr Petty Cash £75

Cr Cash at Bank £75

For a non-imprest system, the postings are to the same accounts, but you simply put in whatever amount of money you think is necessary – maybe £100 each time. There is no set balance to the petty cash account.

I would always recommend that the imprest system is used, as it provides a much better control over the petty cash balance (using a non-imprest system you could end up running out of cash or build up too much cash). In the example above, if I chose to do a spot count on petty cash, there should always be £100 of cash and vouchers. In a non-imprest system, I would have to write up the petty cash book and post it to the main ledger before I knew what level of cash should be there. Hardly a quick “spot count”!