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Difficulty: MediumPetty Cash Book and the Imprest System

At the end of April 2026, the petty cash book of an enterprise reveals analysis column totals of ₦12,500\text{₦}12,500 for postage, ₦8,400\text{₦}8,400 for office cleaning, and ₦5,100\text{₦}5,100 for motor running expenses. Which of the following accounting procedures correctly completes the double entry posting of these expenses to the ledger?

  1. Debit the individual expense accounts in the nominal ledger with their respective totals and credit the Petty Cash Account with ₦26,000\text{₦}26,000.Answer
  2. B
    Credit the individual expense accounts in the nominal ledger with their respective totals and debit the Main Cash Book with ₦26,000\text{₦}26,000.
  3. C
    Debit the Petty Cash Account with ₦26,000\text{₦}26,000 and credit the individual expense accounts in the nominal ledger with their respective totals.
  4. D
    Credit the Main Cash Book with ₦26,000\text{₦}26,000 and debit the Sales Ledger Control Account with ₦26,000\text{₦}26,000.

Answer

Debit the individual expense accounts in the nominal ledger with their respective totals (Postage ₦12,500\text{₦}12,500, Cleaning ₦8,400\text{₦}8,400, Motor Running Expenses ₦5,100\text{₦}5,100) and credit the Petty Cash Account with the total disbursements of ₦26,000\text{₦}26,000.
The petty cash book serves as a book of original entry. At the end of an accounting period, the totals of the analysis columns represent specific operating expenses. According to double-entry bookkeeping rules, expenses are debited to their respective nominal ledger accounts, and the total credit entry is made to the Petty Cash Account (or reflected via the credit side of the petty cash book).

Step-by-Step Solution

1
Calculate the total petty cash disbursements for the period.
Total disbursements = ₦12,500+₦8,400+₦5,100=₦26,000\text{₦}12,500 + \text{₦}8,400 + \text{₦}5,100 = \text{₦}26,000.
Determines the total reduction in petty cash balance.
2
Apply double entry principles for expense recording.
Expenses increase on the debit side of nominal ledger accounts.
The individual analysis column totals represent specific expenses incurred by the business.
3
Post the column totals to their respective ledger accounts.
Debit Postage Account with ₦12,500\text{₦}12,500, Cleaning Account with ₦8,400\text{₦}8,400, and Motor Running Expenses Account with ₦5,100\text{₦}5,100, while crediting Petty Cash Account with ₦26,000\text{₦}26,000.
This maintains the double entry system where total debits equal total credits.

Key Concept

Double Entry Posting of Petty Cash Analysis Columns
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Topics

Petty Cash Book and the Imprest System

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