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