A business operates petty cash using imprest system. At the beginning of the month, the petty cashier was given Sh.120,000 out of which Sh.85,000 was spent. How much was reimbursed at the beginning of next month?Question 8Answera.Sh.85,b.Sh. 100,000c.Sh.35,000.d.Sh.120,000
Question
A business operates petty cash using imprest system. At the beginning of the month, the petty cashier was given Sh.120,000 out of which Sh.85,000 was spent. How much was reimbursed at the beginning of next month?Question 8Answera.Sh.85,b.Sh. 100,000c.Sh.35,000.d.Sh.120,000
Solution
The imprest system is a form of financial accounting system. The most common example of its use is in the replenishment of a petty cash fund.
Here's how to calculate the reimbursement:
- Start with the initial amount of the petty cash, which is Sh.120,000.
- Subtract the amount that was spent, which is Sh.85,000.
- The result is the amount left in the petty cash at the end of the month, which is Sh.120,000 - Sh.85,000 = Sh.35,000.
- Since the petty cash system is an imprest system, it should be replenished to the original amount at the beginning of each month.
- Therefore, the amount to be reimbursed is the original amount (Sh.120,000) minus the amount left (Sh.35,000), which equals Sh.85,000.
So, the correct answer is a. Sh.85,000.
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