Hi,

I have two issues that I need some help and clarity. 

 1. Cash Clearing.  I am presently working with a company that receives cash payments from customers from time to time.  In the past these payments were debited to the bank.  However, they do not deposit the cash in the bank.  A lot of times they just put it in the petty cash box and it all gets mixed together until there are a few hundred dollars and the owner decides they don't like to have that much cash so they make a cash deposit.  Needless to say the bank reconcilliation is a nightmare.  I have now created a cash clearing account and would like to start putting all cash payments in that account and when the owner decides to make a cash deposit I will go to the general journal and debit the bank and credit the cash clearing account.  Please tell me if that is the best way to handle this situation.  Also, what do I do with all the other cash payments sitting in the bank that haven't been deposited - they are still showing on the bank reconcilliation.

 2.  Petty Cash.  This company has never really kept track of petty cash.  They had a cash box and as I mentioned above sometimes when they receive cash payments from a customer they would put it in the petty cash box and it would sometimes get used up.  Now they have purchased a cash register and I never see the cash I just get a copy of the invoice and a note saying the invoice was paid by cash.  They have no set amount for petty cash.  How can I make this work better?  How do I clean all this up and make it work?  Please help.

Thanks.

Hi there:  You are not kidding that it is a nightmare!  The first thing you need to do (or at least what I would do) is to tell them to STOP putting cash payments into the "Petty Cash" box.  That just doesn't work as you have found out.  Especially if noone is making the necessary entries in a petty cash log to note what cash is going in and what cash is going out and what each is for. 

Setting up a cash clearing account to put the cash receipts to is a good idea as long as the actual cash itself is kept in a separate cash box (NOT the petty cash box if at all possible).  Then when you make a deposit to the bank the journal entry will be as you described. 

The other cash payments that in the past were posted as a debit to the bank -- what account did they credit in those entries?   Whatever account it was, you should just do a reversal of all the debits to the bank that didn't actually get deposited and put the other side of the entry to the account that was credited before.  That will get rid of the incorrect entries.    The only thing to check out is what was the other side of the entry when the accumulated cash receipts that were collecting in the petty cash account were ACTUALLY finally deposited to the bank account.  What you want to make sure of is that these cash receipts are not somehow getting recorded as Sales more than once.

2.  Petty Cash.  Now that they have a cash register they must have to balance the cash in the register at the end of the day to the cash actually used in the "float" that the register starts out with.  If they pay for something purchased with cash from the til and they give you the invoice for paid item, then you have to get that recorded as an expense to the correct expense account and GST Paid on Purchases account. 

The cash in the til and any of these types of paid invoices will be part of the daily reconciliation.  You will need to do entries for the days sales, etc. from the Summary Tape from the til at the end of the day.  Is this what is happening? 

I think that you will not be referring to the cash in the til as petty cash in the usual sense, but as a "Til Float" of whatever amount they want to start out each day with.  Operating a float in a cash register is an entirely different concept than the ordinary "petty cash" type of thing.  If you still want to know the best way to look after petty cash let me know.    I don't know if any of these suggestions will be helpful in your situation or not but get back to me with more questions if this doesn't take care of it all.   Rita Deering

Hi Rita,  Thank you so much for your very quick response and detailed reply.  I will work through what you have told me and get back to you.  Donna

Hi Rita, I have been trying to find the answer to a question regarding cash register income, and I hope you can answer.  I am new to Simply Accounting as I have always done my bookkeeping by hand and had hoped to make it easier on myself.

I have just started a business and as we have no "customers" by name because we are a retail store, I can find no way to enter sales and receipts from the till tape, nor enter deposits without a customer name.  Can you possibly help me out by telling me how to enter daily sales from the til?

Anita Poon

Hi Donna:   Since you don't have "Receivables" in the normal way, don't use the A/R Module, Sales Window etc. to record your income.  Just use the General Journal and make up a "Recurring Entry" to record your daily sales from the till.

The till tape should have a breakdown of a number of things on it when you do the Summary at the end of the day.  Things like Gross Sales, PST Collected, GST Collected (and any other breakdowns that you might have to record in separate accounts).  You would also need a "Cash Clearing" account set up in the Asset section of your Chart of Accounts to put the other side of your entry to when recording the Sales. (This account will then be the "other side of your entry" when you record the actual deposit to your bank account.)   So your journal entry might look like the following:

Dr. Cash Clearing           $1,120.00   Cr. Gross Sales        $1,000.00                 Cr. PST Collected                $70.00   Cr. GST Collected         $50.00   

(And any other breakdowns would be part of it too if you have other things.) This will get your daily Sales recorded.  Then when you do a deposit to the bank, using your Deposit Book or Deposit Slip to record from, the journal entry would be:

Dr. Bank              $ 1,120.00           Cr. Cash Clearing          $ 1,120.00

And if you don't go to the bank every day, the deposit book may have several days worth of earnings being deposited at once, but the Cr. to Cash Clearing should clear the number of days worth of earnings that you have been collecting before going to the bank with the deposit.  Think this through and let me know if you have any more questions.  Rita Deering