Ten grand used up entertaining American with meal and posh cakes (7)

'cakes' is the definition.
(gateau is a kind of cake)

'ten grand used up entertaining american with meal and posh' is the wordplay.
I cannot really understand how this works, but
'ten' could be 'x' (roman numeral) and 'x' is present in the answer.
'grand' could be 'g' (G is short for ground as in a thousand) and 'g' is found in the answer.
'american' could be 'a' (common abbreviation - e.g. in organisation names) and 'a' is located in the answer.
'meal' could be 'tea' (tea is a kind of meal) and 'tea' is found in the answer.
'posh' could be 'u' (abbreviation for upper-class - opposite to non-U) and 'u' is found in the answer.
This accounts for all the letters.
This explanation may well be incorrect...