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Petty Cash

Table of Contents
Prime Costs Controls

Most restaurants use the register for petty cash. A more satisfactory system would be to set up a petty cash fund with enough money so that no one places his or her hand in the drawer. This way, when the register tape reads $1,500.00 in cash, it is an accurate reading. Some operators will continue to dip into the register, no matter how disruptive or damaging it could be. Provide more control by setting up a petty cash fund.

Bookkeeper Notes

Only debit petty cash when you set up the fund or increase it. A Petty Cash Fund setup for $5000.00 is as follows:

                                                                       Debit                     Credit

            Petty Cash                                       $5,000.00

            Cash Checking                                                              $5,000.00

To set up petty cash.

Limit who has access to the petty cash box and require a voucher with all cash requests.  A receipt would back up the voucher. At any given time, the receipts and cash should add up to $5,000.00.  To replenish the petty cash box, book an entry to the appropriate expense accounts or cut a check to the appropriate expenses. Continuing with the above example, the entry should read as follows:

                                                                       Debit                   Credit

            Travel                                               $   100

            Supplies                                                 250    

            Flowers                                                  100

            Cash Checking                                    ____                      $   450

                                                                    $   450                   $   450

To replenish petty cash.

Recurring Journal Entries  

Depreciation, amortization of prepaid expenses and some minor accruals need to be booked monthly. Set up a worksheet to book them monthly or simply load them into the accounting system. This will save time when compiling financial statements.

Additionally, accruals for payroll should be entered into the system to ensure payroll expenses agree with the number of days in the month.

Flash Reports & Tips

Timely financial statements should be available for review within the first 10 days of the following month. An operator can run a weekly report to pick up on the discrepancies in operational costs and sales. For a sample report, review the Garyís Tavern flash report on the next page.  This type of report highlights prime costs and breaks them down by category. Be sure to include notes on what happened during the week.

When observing the Garyís Tavernís flash report on the following page, an operator can quickly identify the following problems:

q       Garyís Tavern ordered too much food, wine and liquor. They can cut back the order for next week.

q       They were overstaffed in the kitchen.

q       Lunch sales picked up.

q       They did not pay attention to the weather forecast when staffing.

The extra effort ultimately saves the operator time and money. In addition, flash reports take only twenty minutes to prepare and ten minutes to read.


Table of Contents
Prime Costs Controls

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