The process

Revision

All information must be recorded

• Money from Customers is recorded on a

Receipt

• Money paid to suppliers and employees on a

Cheque

All Receipts are recorded in a

Cash Receipt JournalDate Details Rec. No. Sales

(Fees)Loan Capital GST

CollectSundries Bank

Oct19 Capital 001 10,000 10,000

20 Loan 002 20,000 20,000

21 Sales 003 150 15 165

22 Sales 004 250 25 275

25 Government Grant

005 15,000 15,000

26 Sales 006 500 50 500

29 Debtor 007 660 660

TOTALS 900 20,000 10,000 90 15,660 46,600

All Payments are recorded in a

Cash Payments JournalDate Details Chq. No. Wages Stock Rent GST Paid Sundries Bank

Oct19 Rent 001 900 90 990

21 Wages 002 500 500

24 Equipment 003 2,000 20,000 22,000

25 Stock 004 15,000 1,500 16,500

27 Telephone installation

005 280 2,800 3080

28 Wages 006 500 500

30 Stock 007 5,000 500 5,500

TOTALS 1,000 20,000 900 4,370 22,800 49,070

All the Receipts & Payments in the Journals are reported in a

Statement of Receipts and Payments• Name of the business, name of the report,

date of the report• Bank at beginning• Receipts – all the headings and totals from the

Cash Receipts Journal except Sundries which are listed individually

• Less Payments – all the headings and totals from the Cash Payments Journal except Sundries

• Bank at end

Williams WineryStatement of Receipts & Paymentsfor the month ending 31st October

Bank at beginning 0Add ReceiptsSales 900Loan 20,000Capital 10,000Government Grant 15,000Debtors 660GST Collected 90 46,600Less Payments 46,600Wages 1,000Stock 20,000Rent 900GST Paid 4,370Equipment 20,000Telephone Installation 2,800 49,070Bank at end (2,470) William’s Winery owes the Bank = Overdraft

Zero because this business is just starting

Classify all the items in the Statement of Receipts & Payments• Revenue – earnings from running the business• Expenses – cost from running the business• Assets – How much the business owns• Liabilities – How much the business owes• Owner’s Equity – anything to do with the owner– Capital – money put in by the owner– Profit (Loss) – belongs to the owner– Drawings – money taken out by the owner

Williams WineryStatement of Receipts & Paymentsfor the month ending 31st October

Bank at beginning 0Add ReceiptsSales 900Loan 20,000Capital 10,000Government Grant 15,000Debtors paid 660GST Collected 90 46,600Less Payments 46,600Wages 1,000Stock 20,000Rent 900GST Paid 4,370Equipment 20,000Telephone Installation 2,800 49,070Bank at end (2,470)

Revenue – money from customersLiability – money owed to Finance companyOwner’s Equity – money from ownerRevenue – money from GovernmentAsset – money owed by customersLiability – money owed to ATO

Expense – money paid to employeesAsset – owned by businessExpense – money paid for hire of buildingLiability – money owed / paid to ATOAsset – owned by the businessExpense – money paid for hire of servicesLiability– money owed the Bank

All the Revenues & Expenses go into the Income Statement

Williams WineryIncome Statementfor the month ending 31st October RevenueSales 900Government Grant 15,000 15,900Less ExpensesWages 1,000Rent 900Telephone Installation 2,800 3,700Net Profit 12,200

Go through the Statement of Receipts & Payments

• Work out which are the items that belong to the Balance Sheet

Balance SheetAssets LiabilitiesItems owned Items owed

Owner’s EquityOwner’s items

Williams WineryStatement of Receipts & Paymentsfor the month ending 31st October

Bank at beginning 0Add ReceiptsSales 900Loan 20,000Capital 10,000Government Grant 15,000Debtors paid 660GST Collected 90 46,600Less Payments 46,600Wages 1,000Stock 20,000Rent 900GST Paid 4,370Equipment 20,000Telephone Installation 2,800 49,070Bank at end (2,470)

Liability – money owed to Finance companyOwner’s Equity – money from owner

Asset – money owed by customersLiability – money owed to ATO

Asset – owned by business

Liability – money owed / paid to ATOAsset – owned by the business

Liability– money owed the Bank

Williams WineryBalance Sheet as at 31st October

AssetsStock 20,000Equipment 20,000GST Refund 4,280(GST Collected $90 lessGST Paid $4,370)

44,280

LiabilitiesOverdraft 2,470Loan 20,000 22,470

Owner’s EquityCapital 10,000Add Profit 11,810

21,810

44,280

Last month’s Balance Sheet

• When working with a business that has existed for some time– Check the previous month’s Balance Sheets > this

will give you• An idea what Assets & Liabilities the business already

has• A starting figure

– Look at the Statement of Receipts & Payments to see if the figures have changed during the month