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Ali operates an imprest system for petty cash, and the float in petty cash is topped up to $250 at the end of each month.
During April, $25 was paid into petty cash by employees paying for private use of the office photocopier and a cheque for $20 was cashed for an employee out of petty cash. During April, cheques for $340 were drawn by Ali for petty cash.
How much cash was paid out for petty cash expenses during April?
A $295
B $345
C $355
D $385I don’t understand how to do this, why does Ali drawn cheque $340 for petty cash but his imprest amount is only at $250? Does he suddenly decides to increase his petty cash float amount?
If there is a run on PC ie lots of expenditure, then it will need to be topped up during the month to stop it running out.
So, if we have $250 in the PC box at 1 April, then $25 is paid in and $20 paid out, there would be $255. $340 is also paid in and this should bring the amount back to $250 the imprest target amount.
Therefore, $345 must be the expenditure on PC expenses:
255 + 340 – EXPENDITURE = 250
EXPENDITURE must be $345.
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