Raghav Kapoor Software Limited

Case
Prsented By:
Akshay Kumar
Ashirdeep Singh
Madhav
Neeraj
Rahul Mattoo
Vipin Kumar

Contents

Journal
Ledger
Trial Balance
P & L Account
Balance Sheet
Retained Earnings
Case

Journal
Date
01-Jun

02-Jun

06-Jun

08-Jun

10-Jun

16-Jun

Description
Bank A/C
To Share Capital
To Bank Loan
(Deposit from Vinay and Sheela in exchange for shares and
borrowed 25,000 from bank)
Rent A/C
To Bank A/C
(Office rent paid for the month of June)
Equipment
To Bank A/C
To Computer A/C payable
(Being paid for computer)
Supplies
To Supplies Payable
(Received supplies)
Trade receivable
To revenue from services
(Invoices being raised for providing services)
Supplies payable
To Defecive Supplies
To Bank A/C
(Being paid for the supplies except the defective supplies)

Dr
Cr
Cr

Dr
85000

Cr
60000
25000

Dr
Cr

2500

Dr
Cr
Cr

40000

Dr
Cr

3900

Dr
Cr

29200

Dr
Cr
Cr

3900

2500

15000
25000

3900

29200

710
3190

19-Jun

20-Jun

Bank A/C
To Trade receivable
(Received cheque from customers)
Trade receivable
To revenue from services

Dr
Cr

14100

Dr
Cr

19400

Dr

9800

14100

19400

(Invoices being raised for providing services)

23-Jun

Bank A/C
To unearned revenue from services

Cr

9800

(Cheque being received for services to be provided in July)

27-Jun

Defective supplies
To Bank A/C
To Discount Received

Dr
Cr
Cr

710

Dr
Cr

7100

Dr
Dr
Cr

14000
340

Dr
Cr

16500

Dr
Cr

450

Dr
Cr

1500

620
90

(Discount being received on defective supplies)

28-Jun

Bank A/C
To Trade receivable

7100

(Cheque being received for services provided)

29-Jun

30-Jun

30-Jun

30-Jun

Bank Loan
Interest Paid
To Bank A/C
(Repayment of Bank Loan)
Salary A/C
To Bank A/C
(Salaries being paid for the month)
Electricity
To Electricity A/C payable
(Bill received but not paid)
Supplies Expense
To Supplies
(Inventory of Supplies)

14340

16500

450

1500

Ledger
Dr.
Date
01-Jun
01-Jun

Particular
Share Capital
To Bank Loan

19-Jun

To Trade Receivable

23-Jun
28-Jun

Bank A/C
Amt.
Date
60,000
02-Jun
25,000
06-Jun

Cr.
Particular
By Rent A/C
By Equipment

14100

16-Jun

By Supplies Payable

To Unearned Revenue from

Services

9800

27-Jun

By Defective Supplies

To Trade Receivable

7100

29-Jun
29-Jun
30-Jun
30-Jun

By Bank Loan
By Interest paid
By Salaries
By Bal C/D

Amt.
2,500
15,000
3,190
620
14,000
340
16,500
63,850

116,000

Dr.
Date

Particular
To Bal C/D

Share Capital
Amt.
Date
60,000
01-Jun
60,000

116,000

Cr.
Particular
By Cash A/C

Amt.
60,000
60,000

Dr.
Date
29-Jun

Bank Loan A/C

Particular

To Bank A/C
To Bal C/D

Dr.
Date
06-Jun

Particular
To Bank A/C

06-Jun

To Computer A/C Payable

Amt.
14000
11000
25000

Cr.

Date
01-Jun

Particular
By Cash A/C

25000
25000

Equipment A/C
Amt.
Date
15000
25000

Amt.

Cr.
Particular

Amt.

By Bal C/D

40000

40000

Dr.
Date
06-Jun

Particular
Computer Equipment

Dr.
Date
08-Jun

Particular
Supplies Payable

40000

Computer A/C Payable

Amt.
Date
25000
c/d
25000

Supplies
Amt.
Date
3900
41820
3900

Cr.
Particular

Amt.
25000
25000

Cr.
Particular
Supplies Expense
c/d

Amt.
1500
2400
3900

Dr.
Date
16-Jun
16-Jun

Particular
Bank A/C
Defected Supplies

Dr.
Date
27-Jun
27-Jun

Particular
Bank A/C
Discount Received

Dr.
Date

Particular
c/d

Dr.
Date

Particular

Supplies Payable
Amt.
Date
3190
41798
710
3900

Cr.
Particular

Amt.
3900

Supplies

3900

Defective supplies
Amt.
Date
Particular
620
41806
Supplies Payable
90
710

Cr.
Amt.
710
710

Revenues from services

Amt.
Date
Particular
41800
Trade Receivables
48600
41810
Trade Receivables
48600

Trade receivable
Amt.
Date

Cr.
Amt.
29200
19400
48600

Cr.
Particular

Amt.

10-Jun

Revenue from Services

29200

41809

Bank A/C

14100

20-Jun

Revenue from Services

19400

41818

Bank A/C

7100

c/d
48600

27400
48600

Dr.
Date

Unearned Revenue
Particular

c/d

Amt.

Cr.

Date

9800

41813

Particular

Amt.

Bank A/C

9800

9800

Dr.
Date

9800

Discount received
Particular

Amt.

c/d

Cr.

Date
90

41817

Particular

Amt.

Defected Supplies

90

90

Dr.
Date
02-Jun

90

Rent A/C
Particular

Bank A/C

Amt.

Cr.
Date

2500

Particular

Amt.

c/d

2500

2500

Dr.
Date
29-Jun

Interest Paid
Particular

Bank A/C

2500

Amt.

Cr.
Date

340
340

Particular
c/d

Amt.
340
340

Dr.
Date
30-Jun

Salary A/C
Particular

Bank A/C

Amt.

Cr.
Date

16500

Particular

Amt.

c/d

16500

16500

Dr.
Date
30-Jun

16500

Electricity A/C
Particular

Amt.

Electricity Expense

Cr.
Date

450

Particular

Amt.

c/d

450

450

Dr.
Date

450

Electricity Bill Payable

Particular

Amt.

c/d

Cr.

Date
450

41820

Particular

Amt.

Electricity Expense

450

450

Dr.
Date
30-Jun

Supplies expense
Particular

Supplies

450

Amt.
1500
1500

Cr.

Date

Particular
c/d

Amt.
1500
1500

Trial Balance
Explanation

Bank A/C

Debit

Credit

63850

Share Capital

60000

Bank Loan

11000

Equipment

40000

Computer A/C Payable

Supplies

25000
2400

Revenue from Services

Trade Receivables

48600
27400

Unearned Revenue

9800

Discount Received
Rent A/C
Interest Paid
Salary A/C
Electricity A/C

90
2500
340
16500
450

Electricity Bill Payable

Supplies Expense

450
1500
154940

154940

P & L Account
Revenue
Revenue from Services
Discount Received

48600
90
48690

Expenses
Rent Expense
Interest Expense
Salary Expense

2500
340
16500

Electricity Expense

450

Supplies Expense

1500
21290

Net Profit

27400

Balance Sheet
Equity and Liabilities
Share Capital

60000

Reserves and Surplus: Retained Earnings

27400

Computer A/C Payable

25000

Unearned Revenue
Electricity Bill Payable
Bank Loan

9800
450
11000
133650

Assets
Computer Equipment

40000

Bank A/C

63850

Supplies

2400

Trade Receivables

27400
133650

Retained Earnings
Opening Balance

Add Net Profit

27400

Amount Available

27400

Deduct Dividends

Ending Balance

27400

Implication of Dividend
This implies that if the Kapoors pay themselves a dividend of 10 per
share, then the net profit would become a negative value and also the
net shareholders fund would reduce from 60000 to 27400.

CASE STUDY:
FINDOMEGO.COM
Case revolves around a character named Amit who is
the Vice President, Sales and operation in the India
office of Findomego.com.
He is looking for advice from his Business School
professor, Mr. Sudipto Bhattacharya, to get out of a
mess Amit is facing at his workplace.
Other characters involved in the case are:
Director of Sales and Marketing (Amits
immediate boss).
Managing Director of Company in India ( He is
the one to whom Amits Boss reports)

QUESTIONS:
1. Evaluate Amits action.
Sol: Positive points of Amits action.

a) He consulted with his immediate boss for approval.

b) He had no personal interest in the contract, according to
him it was solely for companys benefit.
Negative points of Amits action:
a) Weak analysis.
b) He was desperate to meet his target and bonus for
providing additional business to the company.
c) He didnt consulted with any senior/experienced person
about the change in terms and conditions of deal.
To conclude, we can say Amits action was justified as it was in
favor of companys benefit, but he didnt had any experience of
this kind of deal so, he must not have signed the contract on his
own without consulting any expert.

QUESTIONS:
2. What is your opinion, the Managing Directors
point of view about revenue recognition?
Sol: The deal is going to be profitable in long-term only but the

revenue which would have generated from the contract

otherwise was 15% of the quarterly target. But at the same
time company may compensate for this loss in future by the
same deal.
So, Managing Directors Point of view about revenue
recognition was short term as this reduction in quarterly target
of company can bring a negative effect on the stakeholders of
company.

QUESTIONS:
3. Do you agree with Amit that the companys
procedures could stifle innovation and risk
taking?
Sol: The company always welcomes new ideas from the

employees but before signing any big contract, it is necessary

to discuss positives and negatives of the contract. Also making
the employees free to take risks on behalf of the company can
bring the company at risk which would not just affect the
business but also the stake holders. So, the company's
procedure is not going to affect the innovation and risk taking
capability rather it would keep the company free from any big
risk.

QUESTIONS:
4. Draft a response from Professor Bhattacharya to
Amit.
Sol:

Dear Amit,
As you were thinking in the favor of company so, you
wasnt totally wrong. But you did your share of mistakes while
signing the contract, by not consulting with your senior about the
changes in terms and conditions of the contract. So, I will suggest
you to accept this mistake done by you in front of your managing
director instead of blaming company procedures or someone else
and then to seek for his advice to how to move further in this
situation.
Best Wishes
Sudipto Bhattacharya