Examkin

Question

Difficulty: MediumPetty Cash Book and the Imprest System

At the end of May 2026, a firm's petty cash book showed total disbursements of ₦18,400\text{₦}18,400, comprising ₦6,200\text{₦}6,200 for stationery, ₦7,500\text{₦}7,500 for office cleaning, and ₦4,700\text{₦}4,700 for travelling expenses. What is the correct double entry required to record these expenditures in the general ledger?

  1. Debit Stationery Account with ₦6,200\text{₦}6,200, Cleaning Account with ₦7,500\text{₦}7,500, and Travelling Expenses Account with ₦4,700\text{₦}4,700, and Credit Petty Cash Account with ₦18,400\text{₦}18,400Answer
  2. B
    Debit Petty Cash Account with ₦18,400\text{₦}18,400 and Credit Main Cash Book with ₦18,400\text{₦}18,400
  3. C
    Credit Stationery Account with ₦6,200\text{₦}6,200, Cleaning Account with ₦7,500\text{₦}7,500, and Travelling Expenses Account with ₦4,700\text{₦}4,700, and Debit Petty Cash Account with ₦18,400\text{₦}18,400
  4. D
    Debit Stationery Account with ₦6,200\text{₦}6,200, Cleaning Account with ₦7,500\text{₦}7,500, and Travelling Expenses Account with ₦4,700\text{₦}4,700, and Credit Main Cash Book with ₦18,400\text{₦}18,400

Answer

Debit Stationery Account with ₦6,200\text{₦}6,200, Cleaning Account with ₦7,500\text{₦}7,500, and Travelling Expenses Account with ₦4,700\text{₦}4,700, and Credit Petty Cash Account with ₦18,400\text{₦}18,400.
Under the double entry system, the analysis columns of a Petty Cash Book serve as a book of prime entry. At the end of an accounting period, the total of each analysis column is debited to its corresponding expense account in the general ledger, while the grand total of all disbursements is credited to the Petty Cash Account to reflect the reduction in petty cash.

Step-by-Step Solution

1
Identify the purpose of posting petty cash analysis totals.
Analysis column totals represent the total expenses incurred during the period under each cost category.
To complete the double entry in the general ledger for transactions initially recorded in the petty cash book.
2
Apply the double entry rule to expense accounts.
Debit Stationery Account ₦6,200\text{₦}6,200, Cleaning Account ₦7,500\text{₦}7,500, and Travelling Expenses Account ₦4,700\text{₦}4,700.
Expenses are increased by debiting their respective ledger accounts.
3
Apply the double entry rule to the Petty Cash Account.
Credit Petty Cash Account with total disbursements of ₦18,400\text{₦}18,400.
The petty cash asset is reduced by total disbursements made during the period.

Key Concept

Ledger posting of Petty Cash Book column totals
Rate this question

Topics

Petty Cash Book and the Imprest System

More questions from this topic