I have tried the same but when i post the petty cash entry through vendor bill that amount was not was reduced from the petty cash journal on the dashboard. if i leave that outstanding payments account as blank it get reduced.

I have registered the payment with petty cash journal. but still it shows as "In Payment"

My self created a vendor bill and register by using petty cash journal and it's working fine.

Could you please share me a screen record for the same. with all the configuration on the petty cash entry

Yes, please check answer.

In the Petty cash journal. If i select the the incoming payment and the outgoing payment as petty cash account. if i register the payment in the vendor bill the status of the bill was changed to paid. but the amount was not reduced from the patty cash journal on the dashboard.