Totally confused with question:
Petty cash balance each week £150. At the end of week there are some vouchers with petty cash of £16.20, £10.37, £31.65.
What transactions should be recorded in order to restore the patty cash balance:
1. Dr Bank £91.78 Cr Petty cash £91.78
2. Dr Petty cash £91.78 Cr Bank £91.78
3. Dr Petty cash £58.22 Cr Bank £58.22
4. Dr Bank £58.22 Cr Petty cash £58.22
Could someone please explain me?
Thank you in advance.
Ans) Dr Petty Cash 58.22 Cr Bank 58.22
Petty Cash Balance each week (float) is 150, meaning that at the start of the week, 150 is taken out of the bank and put to the petty cash box. This cash is then used for small, routine expenses.
Total expenses for the week = 16.2 + 10.37 + 31.65 = 58.22
Cash left at the end of the week = 150 – 58.22 = 91.78
Now if we want to maintain the original float of 150, we’ll have to add another 58.22 to the petty cash (58.22+91.78=150).
So, we’ll simply take that amount from bank and put it into the petty cash.
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