Petty Cash Reconciliation
You are the petty-cash custodian for a $300.00 fund at a field office. On Friday you reconcile the box. Receipts: office supplies $47.85, postage $32.10, courier $18.75, coffee supplies $26.40, and a handwritten slip for $15.00 marked 'taxi - client meeting' with no vendor receipt. Cash on hand is $158.90. Policy says: receipts are required for every disbursement; no single disbursement may exceed $50.00; personal meals are not reimbursable; replenish when the balance falls below $75.00. The $15.00 slip is signed by a coworker who is on leave until Monday. Your supervisor asks for the reconciliation before noon today. The fund was last replenished to $300.00 on the 3rd, and the log shows no other entries. All receipts are attached to the log except the slip.
1. Calculate the total documented receipts, the expected cash on hand, and the variance. Show your work.
Read the worked answer
Documented receipts with vendor receipts
- Office supplies: $47.85
- Postage: $32.10
- Courier: $18.75
- Coffee supplies: $26.40
Total: 47.85 + 32.10 = 79.95; 79.95 + 18.75 = 98.70; 98.70 + 26.40 = $125.10
Expected cash if only documented receipts are treated as disbursements
$300.00 - $125.10 = $174.90
Actual cash: $158.90
Variance: 174.90 - 158.90 = $16.00 short
If the $15.00 slip were counted as a disbursement
Total would be $125.10 + $15.00 = $140.10; expected cash would be $159.90, leaving a $1.00 shortage. But the slip has no vendor receipt, so under policy it is not yet a valid disbursement. The $16.00 shortage therefore consists of the $15.00 unsubstantiated slip plus $1.00 cash that is still unexplained.
2. Should the $15.00 slip be reimbursed? What should you do about the $16.00 difference, and who needs to be involved?
Read the worked answer
Do not reimburse the $15.00 slip yet. Policy requires a receipt for every disbursement. A handwritten slip signed by a coworker is not a vendor receipt. Hold it as pending, not as an approved disbursement.
Handle the $16.00 difference in this order:
- Recount the cash box, including loose coins and any folded bills.
- Recheck the log and arithmetic for transposition errors.
- Confirm whether any receipt was left out of the box.
- Report the unresolved shortage to your supervisor before noon with the reconciliation.
- Contact the coworker Monday for a replacement receipt or repayment; do not accuse the coworker.
If the supervisor approves an exception for the $15.00, document the approval and treat the remaining $1.00 as a cash shortage. Do not cover the shortage from personal funds without written authorization. The supervisor must decide whether to write off the $1.00 or pursue recovery.
3. What replenishment amount should you request, and what will the fund balance be after the check is cashed?
Read the worked answer
Request $125.10, the total of receipts that meet policy. Do not request $140.10 unless the supervisor authorizes the $15.00 exception and the $1.00 shortage is separately resolved.
After the check is cashed:
$158.90 cash on hand + $125.10 reimbursement = $284.00
The fund is still $16.00 below the $300.00 imprest amount. That is expected because the $15.00 slip is unapproved and $1.00 is missing. The fund cannot be restored to $300.00 by reimbursing invalid disbursements. The supervisor must resolve the $16.00 separately: the coworker provides a receipt or repays $15.00, and the $1.00 is found or written off. If the $1.00 is found, cash becomes $285.00 after replenishment; the remaining $15.00 still depends on the coworker's receipt.