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Difficulty: HardPetty Cash Book and the Imprest System

A business maintains a weekly imprest system for its petty cash transactions. On 6 July 2026, the petty cashier held an initial float of ₦50,000\text{₦}50,000. During the week, disbursements were made for stationery (₦14,200\text{₦}14,200), office cleaning (₦9,800\text{₦}9,800), and travelling expenses (₦11,500\text{₦}11,500). Additionally, a staff member refunded ₦2,500\text{₦}2,500 in cash for an unspent portion of a travelling advance. At the weekend, management decided to permanently increase the weekly imprest float to ₦60,000\text{₦}60,000. What total amount of cash must the chief cashier issue to top up the petty cash balance to the new float level?

  1. ₦43,000\text{₦}43,000Answer
  2. B
    ₦33,000\text{₦}33,000
  3. C
    ₦35,500\text{₦}35,500
  4. D
    ₦45,500\text{₦}45,500

Answer

₦43,000\text{₦}43,000
Under the imprest system, the amount of cash required to restore and adjust the imprest float equals the net cash outflow during the period plus any addition to the fixed float. Gross expenses total ₦35,500\text{₦}35,500, but the cash refund of ₦2,500\text{₦}2,500 reduces net expenditure to ₦33,000\text{₦}33,000. This leaves ₦17,000\text{₦}17,000 cash remaining in hand from the original ₦50,000\text{₦}50,000 float. To establish the new float of ₦60,000\text{₦}60,000, the chief cashier must provide ₦60,000−₦17,000=₦43,000\text{₦}60,000 - \text{₦}17,000 = \text{₦}43,000.

Step-by-Step Solution

1
Calculate total gross petty cash expenses incurred during the week
₦14,200+₦9,800+₦11,500=₦35,500\text{₦}14,200 + \text{₦}9,800 + \text{₦}11,500 = \text{₦}35,500
Summing all cash disbursements made from petty cash gives gross expenditure.
2
Calculate net cash spent by adjusting for the cash refund received
₦35,500−₦2,500=₦33,000\text{₦}35,500 - \text{₦}2,500 = \text{₦}33,000
Cash received back into the petty cash till reduces the net expenditure.
3
Determine the remaining cash balance before top-up
₦50,000−₦33,000=₦17,000\text{₦}50,000 - \text{₦}33,000 = \text{₦}17,000
Deducting net expenditure from the starting float gives the unspent cash balance on hand.
4
Calculate total reimbursement required to achieve the new float
₦60,000−₦17,000=₦43,000\text{₦}60,000 - \text{₦}17,000 = \text{₦}43,000
The chief cashier must issue cash equal to restoring net spent funds (₦33,000\text{₦}33,000) plus the float expansion (₦10,000\text{₦}10,000).

Key Concept

Imprest System Reimbursement with Float Adjustment
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Topics

Petty Cash Book and the Imprest System

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