How do you replenish petty cash under an imprest system?

• A. Debit petty cash; Credit cash.
• B. Increase the imprest amount by the total receipts.
• C. Close the petty cash account.
• D. Reimburse the fund to fixed imprest amount by recording the total of the receipts and restoring the float.

Answer: (D)

In an imprest petty cash system you keep a fixed float and replenish it so that the fund returns to that exact amount after small expenditures are made. When petty cash is used, you add up the receipts and then replenish by two actions: first, record the total of the receipts as expenses against the appropriate accounts, and second, restore the petty cash to its fixed level by transferring funds from the main cash/bank. Practically, you post the expenses (debits to the relevant expense accounts) and credit petty cash for the total, then you bring the float back up to the original imprest amount by debiting petty cash and crediting bank for that same total. This keeps the petty cash fund constant and ensures every small cost is properly accounted for.