ExpertMedium2 marksShort Answer
ACCA · Question 32 · The Use of Double-Entry and Accounting Systems
Section A
A business maintains a petty cash float of $200 using the imprest system. At the end of the month, the petty cash box contains $45 in cash and vouchers for expenses totaling $150. A $5 note is missing and unaccounted for. How much cash must be withdrawn from the bank to restore the imprest amount?
Section A
A business maintains a petty cash float of $200 using the imprest system. At the end of the month, the petty cash box contains $45 in cash and vouchers for expenses totaling $150. A $5 note is missing and unaccounted for. How much cash must be withdrawn from the bank to restore the imprest amount?
How to approach this question
The imprest system requires restoring the cash balance to the fixed float amount. Float = $200. Current cash = $45. Amount needed = $200 - $45 = $155. (The missing $5 is part of the replenishment, recorded as a cash shortage expense).
Full Answer
Under the imprest system, the petty cash float is restored to its original balance at the end of the period. The original float is $200. The physical cash remaining is $45. Therefore, the amount required to restore the float is $200 - $45 = $155. The $155 withdrawal will cover the $150 of vouchers and the $5 shortage.
Common mistakes
Only withdrawing the amount of the vouchers ($150) and ignoring the shortage.
Practice the full ACCA FA — Financial Accounting Practice Exam 6
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