FORMAT OF THE PETTY CASH BOOK

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.

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.
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