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Preparing Accounting Records for a New Café: General, Receivables and Payables Ledger Accounts

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Added on  2019-09-16

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This article provides a step-by-step guide on how to prepare the relevant general ledger accounts, receivables ledger accounts and payables ledger accounts to record the transactions of a new café. It also explains how to balance each account off and prepare a trial balance at 31st Oct 2016. The article covers transactions related to sales, purchases, and operating expenses, along with information on loans and interest.
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Your client, Craig Butler, has recently opened a new caféand he has asked you to prepare the accounting recordsfor the first three months. This involves creating thegeneral, receivables and payables ledger accounts basedupon the information provided below: On 1 August 2016, Craig started the business bypaying £35,000 into a business bank account fromhis personal savings. He then purchased thefollowing items by cheque: Fixtures and fittings for cafe at cost £25,120 Kitchen equipment at cost £32,450 Craig also obtained a business loan of £25,000,which incurs annual interest at a rate of 4%. Thiswill be repayable in full in 10 years’ time. The Coffee Pot Café has now been trading for 3 months.Transactions for the first quarter are summarised below:SALES – Sales made to customers in the café arerecorded in an electronic till. The till provides totalsof daily sales. All monies are banked weekly andtherefore cash sales should be recorded directly inthe bank ledger account. Craig has also negotiated two contracts to supplylunches to a coach company and a canal boatcompany. These sales are NOT recorded in the till
Preparing Accounting Records for a New Café: General, Receivables and Payables Ledger Accounts_1
and are invoiced separately as both customers havea credit agreement to pay, by electronic bankpayment, within 30 days after being invoiced. Electronic till records for cash, debit card & credit cardsales: Month Total Sales per till(£) August 16,345 September 24,672 October 27,589 Sales to customers on credit for the quarter;Customer Total Sales Invoices(£) Total Receipts(£) Smith’s Coaches 8,950 5,965 Swan CanalBoats 3,470 2,304 PURCHASES – Craig makes two main types ofpurchases - food supplies and other consumables. Hebuys most of his food supplies on credit from ThomasFoods Ltd, and most of the consumables on credit fromCatering Wholesalers Ltd. He also makes a small amount
Preparing Accounting Records for a New Café: General, Receivables and Payables Ledger Accounts_2

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