In your asset accounts you should have one for the full amount of the Petty Cash as a debit. Once set up this account is never touched unless you wish to increase or decrease the actual Petty Cash Amount.

At all times the total cash and receipts in the petty cash box must total the amount in the Petty Cash Asset Account.

When the receipts are turned in for reimbursement I set up a Accounts Payable for the person who is responsible for the Petty Cash. I can then treat each receipt as a separate line on the Purchase invoice so the item can be charged to the proper expense account. When the full entry is complete and posted a cheque can be issued for the amount to be reimbursed to the Petty Cash Box. Your total cash in the box will again equal the Petty Cash Account and receipts can be exchanged for payment. Proper controls like this are better than setting the account as a bank account which is done by some bookkeepers.

Thank you Alwyn!