petty cash

Hi , I am also a student like you

I don’t know if i am allowed to reply to this question or only the tutor can reply here, If not then the moderator can delete my post.

What is fundamental to understand first is that The $88 Balance in hand is the FInal Balance After Removing Expenditure and Adding Sales and The Imprest AMount which needs to be calculated is the Initial Balance you had before any transactions.

SO you need to work your way Back to the initial balance ( IMPREST AMOUNT) from the Final Balance (Petty Cash In hand at end)

You have to reverse all transactions Simran made. Expenditures WIll be added Back because they were subtracted from the initial balance and Receipts Subtracted because they had been added to the initial balance.

So basically :

Balance of petty cash in hand 88
ADD : Sundry purchases 25
ADD : Loan to sales manager 20
ADD :Purchase of staff drinks 20
Less Sundry Sales receipts (47)
Answer. . 106

NOTE : The same Question Came Out in ACCA F3 Financial Accounting December 2009 EXAM with different numbers.

I will be sharing the link to the examiner’s report below :

http://upload.news.esnai.com/2013/0328/1364432068652.pdf

You can see that You need to Add Back Expenses and Subtract Any Income Received from the Final Cash in Hand.

If the question would have asked you to find The Balance of petty Cash in Hand , Then you would have added Receipts and Subtracted Expenses from the Imprest Amount which would already been given in the question but here is the inverse.

If I explained anything wrong above or I made a mistake, Kindly Correct Me Mr John Moffat.

I don’t know if i am allowed to reply to this question above or only the tutor can reply here, If not then the moderator can delete my post.
Thank you