and now we will learn how to record cash related transactions when you pay from a
cash fund sometimes this is also called petty cash spending cash from a cash fund sometimes
physically it's the owner's wallet although it is a good idea to have a separate little lock
box and keep careful tabs and careful track of all the money that comes into and out of the lock box
the cash on hand or petty cash in your QuickBooks records is a bank type of account now that makes
sense because you deposit money into the account when you establish it and you pay from the account
so making it a bank type of account when you set it up in your chart of accounts allows you
to manage it properly usually you write a check to establish and set up the fund and you should
record the payments from the fund as an expense type of transaction because you're not writing
a check you're paying an expense the reference number should be the number from the physical
cash receipt that you receive when you pay for example let's imagine on February 5th we wrote
cheque number for to cash to establish the petty cash fund of $500 that means we walk to the bank
we wrote out the check it by hand wrote the payees name as cash and handed it to the teller and the
teller handed the owner $500 cash from the cash and bank well we can't record this until we set
up an account for petty cash and it's just like we learned before we click the cogwheel because
that's where the settings and setup information is to set up something that we will then use so we'll
then come over and click chart of accounts okay you could also come here by clicking accounting
then you would come to the same window for chart of accounts once you have your chart of accounts
in front of you click new now this type of account will be Bank type of account and cash on hand
there really is no choice for arm there really is no detail type choice for petty cash so just leave
it as cash on hand and the the name can be cash on hand - petty cash depending on the name that
you like now say even close and you can see we now have this account in our chart of accounts
to record all the payments from and deposits to to petty cash now let's see if we can record this
transaction well that's very simple you write a check ok so again you this time you go to the plus
sign and under vendors click check now computer remembers its check number four and this is paid
to the order of cash so you could just click add cash and make cash a new vendor so that you can
write checks with the name cash I kind of messed up the capitalization but don't worry we know that
the date is back on February 5th now the money is coming from the top account cash and bank and it's
coming to the account down at the bottom down here is cash on hand petty cash so the top account is
where the money is coming from when you're writing a check or paying an expense and the account down
here is where the money is going to we know the amount is five hundred dollars push tab ok very
good now when we click Save or save and close or save and new we can come back to the trial
balance by clicking report my trial balance and you can see cash on hand petty cash shows up for
the first time as $500 now let's record paying from petty cash let's imagine on February 6 we
paid $1 cash to Verizon for a prepaid phone card the place we bought the phone card from gave us a
little cash receipt with number one two three four five as the receipt number well that's very simple
we click the plus sign and under vendors click expense now the thing you have to be careful about
is which account you're paying from this is the first time you have to click the pull down arrow
and choose cash on hand petty cash as the account we're paying from now you don't always need the
vendors name so it's nice to choose Verizon and even though we have unpaid bills that we
owe Verizon this transaction has nothing to do with those unpaid bills it is still telephone
expense in the amount of $80 and of course I think the receipt number was one two three four
five reference number one two three four five take a picture of the receipt with your phone
and save it or save the physical receipt itself to match this transaction and again don't forget to
put the date the date was February six so let's go back here to February 6 okay very good so we have
who we paid where it came from when we paid why we paid how much we paid and the reference number now
when we click Save the results are as exactly as what we would expect we can close this out you go
back to the trial balance you see cash on hand petty cash has been reduced by 80 dollars from
what we paid down to four hundred twenty and you can see telephone expense has increased by eighty
it used to be 2600 now it's 2680 and just to prove it I'm going to click on the number and I'm going
to look only at the telephone expense account these charges to the expense account are from
previous bills but this last $80.00 is from the February 6th petty cash petty cash account paying
that expense let's try this one February 7th we paid staples 120 dollars cash for equipment and
staples gave us a receipt with number 8 for 7 - well that's very simple again we click the plus
sign we go to expense we have to make sure that we're paying from the petty cash fund you don't
always need a vendor but it's nice if we choose staples do not worry about the two unpaid bills
this cash payment has nothing to do with that and the date this time is February 7 and this
time what we're paying for is equipment a small amount of equipment which is here there we go and
the amount we're paying I believe is a hundred and twenty dollars ok so now all we have to do
is put the receipt number in the field and save the receipt so that this transaction matches the
hard copy and when we save it petty cash will go down by one hundred and twenty dollars and
become three hundred click Save now when we look at the trial balance you see petty cash cash on
hand has become three hundred and if you look at the equipment account and ask why is it 1215 you
can double click and you can see this equipment purchase was from a bill whereas this equipment
purchase was from petty cash on hand now let's finish up by replenishing the petty cash fund
let's imagine on February the owner withdrew I guess it's Vonda Vonda withdrew 200 from an ATM
machine specifically from the account called cash and Bank to replenish the petty cash fund
and here's the slip an ATM withdrawals if you haven't guessed already should be expense type
of transactions and it's very easy to make we click the plus sign we click expense now we make
sure the money is coming from cash and bank to the petty cash fund and then of course we have
to put the proper date there is no payee in this case or you could put vonda's name but you don't
have to remember the account on top is where the money is coming from and the account on the bottom
is where the money is going to and the amount is $200 and because this is a bank transaction
where you get a receipt in a slip you one two three nine eight seven one two three no oops
nine eight seven and now you recorded all the information about that event the ATM withdrawal
that you replenish the petty cash fund after we click Save we can go back to the trial balance
and you can see petty cash is now up to five hundred and cash and bank has been reduced by the
two hundred let's double click and check it out yep if you go to the bottom you can see the last
transaction that decreased cash and Bank is this two hundred two petty cash to replenish the fund