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 Journal DateDetailsRec. No.Sales (Fees) LoanCapitalGST Collect SundriesBank Oct 19Capital00110,000 20Loan00220,000 21Sales Sales Government Grant 00515,000 26Sales Debtor TOTALS90020,00010, ,66046,600

All Payments are recorded in a Cash Payments Journal DateDetailsChq. No.WagesStockRentGST PaidSundriesBank Oct 19Rent Wages Equipment0032,00020,00022,000 25Stock00415,0001,50016,500 27Telephone installation , Wages Stock0075, ,500 TOTALS1,00020, ,37022,80049,070

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 Winery Statement of Receipts & Payments for the month ending 31 st October Bank at beginning 0 Add Receipts Sales 900 Loan20,000 Capital10,000 Government Grant15,000 Debtors 660 GST Collected 9046,600 Less Payments46,600 Wages 1,000 Stock20,000 Rent 900 GST Paid 4,370 Equipment20,000 Telephone Installation 2,80049,070 Bank 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 Winery Statement of Receipts & Payments for the month ending 31 st October Bank at beginning 0 Add Receipts Sales 900 Loan20,000 Capital10,000 Government Grant15,000 Debtors paid 660 GST Collected 9046,600 Less Payments46,600 Wages 1,000 Stock20,000 Rent 900 GST Paid 4,370 Equipment20,000 Telephone Installation 2,80049,070 Bank at end(2,470) Revenue – money from customers Liability – money owed to Finance company Owner’s Equity – money from owner Revenue – money from Government Asset – money owed by customers Liability – money owed to ATO Expense – money paid to employees Asset – owned by business Expense – money paid for hire of building Liability – money owed / paid to ATO Asset – owned by the business Expense – money paid for hire of services Liability– money owed the Bank

All the Revenues & Expenses go into the Income Statement Williams Winery Income Statement for the month ending 31 st October Revenue Sales 900 Government Grant15,00015,900 Less Expenses Wages 1,000 Rent 900 Telephone Installation 2,800 3,700 Net Profit12,200

Go through the Statement of Receipts & Payments Work out which are the items that belong to the Balance Sheet Balance Sheet AssetsLiabilities Items ownedItems owed Owner’s Equity Owner’s items

Williams Winery Statement of Receipts & Payments for the month ending 31 st October Bank at beginning 0 Add Receipts Sales 900 Loan20,000 Capital10,000 Government Grant15,000 Debtors paid 660 GST Collected 9046,600 Less Payments46,600 Wages 1,000 Stock20,000 Rent 900 GST Paid 4,370 Equipment20,000 Telephone Installation 2,80049,070 Bank at end(2,470) Liability – money owed to Finance company Owner’s Equity – money from owner Asset – money owed by customers Liability – money owed to ATO Asset – owned by business Liability – money owed / paid to ATO Asset – owned by the business Liability– money owed the Bank

Williams Winery Balance Sheet as at 31 st October Assets Stock20,000 Equipment20,000 GST Refund 4,280 (GST Collected $90 less GST Paid $4,370) 44,280 Liabilities Overdraft 2,470 Loan20,000 22,470 Owner’s Equity Capital10,000 Add Profit11,810 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