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Difficulty: MediumPetty Cash Book and the Imprest System

A business operates an imprest system with a fixed petty cash float of ₦45,000\text{₦}45,000. At the end of June 2026, petty cash vouchers revealed total disbursements of ₦36,000\text{₦}36,000, consisting of office stationery ₦12,400\text{₦}12,400, travelling expenses ₦15,600\text{₦}15,600, and cleaning expenses ₦8,000\text{₦}8,000. Which double entry is required in the main accounting books to reimburse the petty cashier and restore the float?

  1. Debit Petty Cash Account ₦36,000\text{₦}36,000; Credit Bank Account ₦36,000\text{₦}36,000Answer
  2. B
    Debit Bank Account ₦36,000\text{₦}36,000; Credit Petty Cash Account ₦36,000\text{₦}36,000
  3. C
    Debit Petty Cash Account ₦9,000\text{₦}9,000; Credit Bank Account ₦9,000\text{₦}9,000
  4. D
    Debit Stationery Account ₦12,400\text{₦}12,400, Travelling Account ₦15,600\text{₦}15,600, Cleaning Account ₦8,000\text{₦}8,000; Credit Bank Account ₦36,000\text{₦}36,000

Answer

Debit Petty Cash Account ₦36,000; Credit Bank Account ₦36,000
Under the imprest system, the petty cashier is reimbursed for exact total expenses paid during the period. Since total disbursements equal ₦36,000, issuing a cheque from the main bank account requires debiting the Petty Cash Account (to restore funds) and crediting the Bank Account (for funds drawn).

Step-by-Step Solution

1
Calculate total petty cash disbursements
Total expenses paid = ₦12,400+₦15,600+₦8,000=₦36,000\text{₦}12,400 + \text{₦}15,600 + \text{₦}8,000 = \text{₦}36,000
Under the imprest system, the amount reimbursed must exactly equal the total cash spent during the period.
2
Determine double entry for reimbursing petty cash float from bank
Debit Petty Cash Account ₦36,000\text{₦}36,000 (receiving asset), Credit Bank Account ₦36,000\text{₦}36,000 (paying asset)
Reimbursement increases petty cash balance back to the float level of ₦45,000 by drawing funds from the bank.

Key Concept

Accounting entry for restoring the petty cash imprest float
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Topics

Petty Cash Book and the Imprest System

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