The petty cash book is ruled in
the form of the single column cash book with an amount column
and addition oat columns for the more usual
classes of expenditure. The
additional (analysis ) columns
are used to analyze expenditures as they arise. Totals are carried forward from
page to page until the end of the periods.
Payment relating to personal accounts (e.g IVOS) are recorded in a separate column headed ledger . at the end of very period, the combined totals of the analysis and ledge columns must equal the total expenditure for the period.
Payment relating to personal accounts (e.g IVOS) are recorded in a separate column headed ledger . at the end of very period, the combined totals of the analysis and ledge columns must equal the total expenditure for the period.
ILLUSTRATION
enter the following
transactions in the petty cash book (maintained) on the imprest system for the
month of July, 2007
July 1 imprest cash received
from main cashier N 20000
July 2 typing papers 500
July 5 office cleaning 1000
July 8 postages and stamps 100
July 11 fuel for office van 1500
July 15 photocopying of documents
200
July 18 telephone charge 800
July 19 office cleaning 600
July 21 IVO to nweke 1000
July24 envelopes 160
July 26 fuel 1000
July 27 paid john 800
July 29 stationeries 1000
July 31 telephone charges
600
REVISION QUESTIONS
ILLUSTRATIONS
1. open a petty cash book for M. Dantata a
petty cashier and enter the
following cash transactions made in
the month of December, 2003 classify the expenses into stationl
&printing, postages and telegrams, traveling expenses, and sundry expenses.
DEC.1. Received imprest from the main cashier 6,000
“ 1. Bought typing papers
“ 1. Paid Okada fare
“ 4 .Bought envelop
paid for stramps
sent E-mail to directors
“ 6. paid for “keke Napepe” fare
paid insurance premium
Bought stationary
“15 hired telephone expenses
“ 19 paid rents & rates
paid printing charges
“ 25 travelling expenses paid
envelops
“ 31. Taxi fares
2a. Why is the cash book normally reguarded as the most important book
of prime and final entry?
(b) explain why cash book is ugarded as both a book of prime entry and
a leader account.
1. explain the following terms
(i)
Petty cash book
(ii)
Float
(iii)
Imprest system.
2. Idris Aloma is a merchant, information entracted
from his records in the months of February 2008 were as follows;
Feb. 1. Opening balance: cash 66,125
Bank 87,531
Feb.3. Purchased goods for cash 36,000
“ 5. Received cheque from Sam. Nweke 51,260
“ 6. cash sales to date 81,000
“ 9. paid insurance expenses in cash 3,164 31,250
“ 11. Sam Nweke’s cheque was returned by the bank as
dishonoured.
“ 16. received cheque from a customer after allowing
him discount of N450
“ 18. Paid hoted expenses in cash 9,500
“ 21. Cash sales paid into bank 62,005
“ 23. Withdrawal cash from the bank for office
use 21,340
“ 26. Paid ndife in cash after deducting a discount of
N500
“ 27 paid
cash into bank 22,135
“ 28 bank
charges for the month 4,850
required ;
to enter the following transactions of Idris Aloma in his cash book and extract the balance
1. The following relate to the
business of Ugochuwku for the month of November, 2005
Nov. 1
opening balances cash 56,000
bank 50,000
Nov 2 cash sales 40,000
Nov 4 cash purchses
Nov 6
received N 8550 cheque in full settlement of N10,000 from Okeafor
Nov 9 paid advertising expenses by cheque 1000
Nov 11 cash sales to date 30,000
“ 13 paid rent
in cash 5000
“ 16 paid
Mohammed cash discount received from
Mohammed 8,000
‘ 18
purchased goods by cheque
40,000
“ 19 cash
sales paid into bank
65,000
“ 21 paid
cash into bank 25,000
’24 cash
sales 35,000
‘ 26 paid upair charges in cash 5000
“ 28 withdrew
cash from bank for office us 20,000
‘ 29 Bought
Office machines in cash 10,000
“ 30 paid wages and salaries in cash
40000
“31 cash
sales 38,000
required
to enter the following transaction in the cash book
Ugochukwu as at 28th Feb. 2005
and extract the balances
topic ledger posting and the trial balance
the
next step after initial
recording of transactions is the
cash book and other journals is to post
the themes to the general ledger
. however, this was deliberately ignored in our previous
discussions because it was assumed that
students are yet to grasp the basic principles of double entry under which ledger accounts are maintained .
they should however, be able to do postings after studying this topic because this
topic inalas it possible for them to:
1. appreciate the role of ledger in recording business transactions
2. understands the rules of double entry book-keeping
3. describe the meaning and objects of preparing a trial balance
4. make posting and prepare a trial balance
The ledger
the ledger is the principle book
of accounts . The ledger is the book containing various accounts it
thus, contains all accounts of
the business enterprise, whether
personal or impersonal. The
classification of account in ledger is shown in the diagram below:
1. Personal accounts are those
which records transactions between the business and individuals firms or companies . they thus, contains record
of financial dealings with
individuals and fimsoci creditors, debtors etc
2. impersonal accounts are those accounts which records particular transactions as the
affect the business itself . impersonal accounts are grouped
into two:
a. real accounts, which
related to tangible things such
as cash, fixed assets, stock etc and
b. nominal accounts, which record expenses and income, gains, and losses eg sales
accounts, wages accounts, discount accounts etc.
Posting
the term posting refers to the process of transferring items from the journal to the debit and
credit sides of their respective accounts in the ledger .
posting may be done at any time, but
in any case, must be completed before
financial statement are prepared .
the book –keeper may do the posting of items
from journal to the ledger by any of the following methods:
1. he may take a particular side first (eg the
debit side) and make the complete
posting of all items in the journals to the debit side of the ledger accounts
and then proceed with the
credit items. This is the least
preferred method and is rarely recommended
2. he may take a particular account (eg sales account) and
post all the debits and credits. Relating to that accounts appearing on a particular, page of the journal. He then proceed with another
account till the end.
3. he may complete posting of each journal entry
before proceeding to the next. That is, he post individual transactions
chronologically as they occur. This is the most preferred method for
practical purpose, and it is the one
recommended to students.