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WAEC SSCE - Financial Accounting - 2001 (Objective)

Question 1 Report

Use the following information to answer the given question,
Taiwo is a sole trader who keeps his petty cash on the imprest system, the imprest amount being N4,000. The following transactions took place for a particular month:
\(\begin{array}{c|c} & & & N \\ \hline Dec. & 1 & \text{petty cash in hand} & 517 \\ & 1 & \text{petty cash to imprest amount} & 3,483 \\ & 6 & \text{Bought notebooks} & 328\\ & 7 & \text{Paid wages} & 914\\ & 14 & \text{Bought postage stamps} & 375 \\ & 16 & \text{Paid to J. Thomas, a creditor} & 536 \\ & 21 & \text{Paid wages} & 928 \\ & 23 & \text{Bought envelopes} & 437 \\ & 27 & \text{Bought postage stamps} & 210\end{array}\)
Amount to be posted to the personal ledger is
Answer Details
The amount to be posted to the personal ledger is N536. The imprest system is a method of managing petty cash whereby a fixed amount of money is set aside for small expenses, and when that amount is exhausted, it is replenished back to the original amount. In this case, the imprest amount is N4,000. The transactions that took place during the month are recorded in the petty cash book. In order to maintain the imprest system, we need to calculate the total amount of expenses incurred during the month and compare it to the amount of money remaining in the petty cash fund. The total expenses for the month are N2,758 (328 + 914 + 375 + 536 + 928 + 437 + 210). This means that the amount of money left in the petty cash fund is N1,242 (N4,000 - N2,758). In order to replenish the petty cash fund back to its original amount of N4,000, N2,758 is added to the amount of money left in the petty cash fund, which gives a total of N4,000. Therefore, N1,242 is the amount that needs to be posted to the personal ledger as an expense incurred during the month. Out of the given options, the correct answer is N536, which represents the amount paid to J. Thomas, a creditor. Therefore, the correct option is N536.
Read lesson note on Cashbook (JAMB)
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