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An organisation restores its petty cash balance to $250 at the end of each month. During October, the total expenditure column in the petty cash book was calculated as being $210, and the impress was restored by this amount. The analysis columns posted to the nominal ledger totalled only $200. Which one of the following would this error cause?
A. The trial balance being $10 higher on the debit side
B. The trial balance being $10 higher on the credit side
C. No imbalance in the trial balance
D. The petty cash balance being $10 lower than it should be.Could you please explain why the answer is B? Thank you in advance.
They have paid $210 out of the cash at bank into petty cash.
Therefore they should have debited petty cash with $210 and credit cash with $210.
What has happened is that they will have credited cash with $210, but because the added up the analysis column wrongly they will have debited petty cash with only $200.
So the debits will be too small by $10, which means that the credit side of the TB will be $10 higher than the debit side.
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