Petty Cash

by Susan
(Canada)

Use Write Cheques to Enter Your Petty Cash Vouchers

How to Complete the Petty Cash Journal Entry ... But Using Write Cheques is a Better Data Entry Method for Petty Cash

Recreated Your Sales Tax Error Message

Your Chart of Accounts Should Have A GST/HST Payable Account

Petty cash has been set up.

Let's say I paid Cindy (employee) $10.50 (includes GST only) from Petty Cash for Parking Expense.

In QuickBooks, how do I record this entry? Is the tax backed out and recorded as an ITC.

Susan

Hi Susan,

There are two ways to track Petty Cash. Check out my chat on How to Manage Your Petty Cash Fund.

My bookkeeping entries do not show tax in them (I may have to think about adding that), but you are going to record the petty cash receipt like any other legitimate business expense.

If you are registered for GST/HST, then yes, you would back out the tax and record it separately. This would be your entry would be:

Debit Parking Expense
Debit GST/HST Payable
Credit Petty Cash (If you are using my preferred method which I talk about in my chat)

I hope that answers your question adequately.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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Comments for Petty Cash

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Mar 19, 2011
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Petty Cash
by: Susan

Hello,

Thank you for responding to my question re: recording petty cash expense and backing out the tax.

If I use the petty cash register, I cannot include the tax?

If I make a general journal entry and debit the GST, I get a window coming up telling me:

"You are posting directly to a sales tax account. This will result in inaccurate amounts on sales tax reports and when filing sales tax returns. To correct this issue, click cancel and select a sales tax item on the journal entry."

Do I need to set up a separate tax payable account in chart of accounts? I thought QuickBooks sets those up according to your postal code.

Mar 19, 2011
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Best Way to Enter Petty Cash Receipts
by: Lake

Hi Susan,

I led you a bit astray. Sorry :0(

I have uploaded 4 snap shots for you because sometimes a picture is worth a thousand words.

When you are in the petty cash register, double click and the Write Cheques will open.

The first picture shows you what your petty cash bookkeeping entry would like. As this person lived in Ontario, HST was calculated instead of GST but the mechanics are the same.

In the second picture, I wanted you to see what you need to enter in order to not to get your error. Notice the red circle. You have to manually tell QuickBooks which line you want to "attach" your sales tax entry.

In the third picture, I recreated your error message. I got this when I did not complete the field I circled in red in the previous picture.

The fourth picture just shows a piece of a chart of account and how the GST/HST Payable Account looks when the sales tax feature in QuickBooks is turned on.

So I hope this clears things up so the water is looking a little less murky!

Sep 09, 2016
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Petty Cash Shortages
by: Sharon

My client keeps a $300 float in petty cash. At the end of the month after expenses the account's ending balance is $195.21.

In order to bring the account back up to the $300 she should have written a cheque for $104.79. Unfortunately she miss-calculated and wrote the cheque for $102.30. The account is now short $2.49.

I know I have to account for this shortage and debit the cash over/under expense account $2.49 but I am not sure what account to credit in this case.

Thank you.

Sep 09, 2016
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Petty Cash Shortages
by: Lake

Hi Sharon,

Unless I'm missing something your entry would be between your petty cash account and your over/under cash accounts.

Your other option is not make any adjustment. The balance will be restored to $300 when it is gets topped up next time.

Sep 14, 2016
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Redemption Receipts From a Gift Card
by: Erinn from Hamilton

Hi there,

Our company has a reloadable Tim Horton's card which we reload with our company Visa card. We've collected and kept the receipts from when we purchase with the card.

I'm just a bit confused as to how I would enter this. The card is reloaded with a Visa, but the purchases are redeemed from the card. So technically the way it appears to me is that the Tim Horton's purchases were prepaid for with the Visa.

Please help! New Bookkeeper

Sep 14, 2016
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Erinn
by: Lake

Sorry it took so long for me to reply. I missed your original posting.

If it were me, I'd set the card up as a credit card so that it will be easy to do regular reconciliations.

For procedures on how to treat the card, I'd treat each top up like a petty cash top up. You can read how to manage petty cash here:

https://www.bookkeeping-essentials.com/petty-cash-fund.html

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