Raghav Kapoor Software Limited Case

8/10/2019 Raghav Kapoor Software Limited Case

1/18

Raghav Kapoor Software Limited

CasePrsented By:

Akshay Kumar

Ashirdeep Singh

Madhav

Neeraj

Rahul Mattoo

Vipin Kumar


2/18

Contents

Journal

Ledger

Trial Balance P & L Account

Balance Sheet

Retained Earnings

Case


3/18

JournalDate Description Dr Cr

01-Jun Bank A/C Dr 85000To Share Capital Cr 60000

To Bank Loan Cr 25000

(Deposit from Vinay and Sheela in exchange for shares and

borrowed 25,000 from bank)

02-Jun Rent A/C Dr 2500

To Bank A/C Cr 2500

(Office rent paid for the month of June)06-Jun Equipment Dr 40000

To Bank A/C Cr 15000

To Computer A/C payable Cr 25000

(Being paid for computer)

08-Jun Supplies Dr 3900

To Supplies Payable Cr 3900

(Received supplies)

10-Jun Trade receivable Dr 29200To revenue from services Cr 29200

(Invoices being raised for providing services)

16-Jun Supplies payable Dr 3900

To Defecive Supplies Cr 710

To Bank A/C Cr 3190

(Being paid for the supplies except the defective supplies)


4/18

19-Jun Bank A/C Dr 14100

To Trade receivable Cr 14100

(Received cheque from customers)

20-Jun Trade receivable Dr 19400

To revenue from services Cr 19400

(Invoices being raised for providing services)

23-Jun Bank A/C Dr 9800To unearned revenue from services Cr 9800

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

27-Jun Defective supplies Dr 710

To Bank A/C Cr 620

To Discount Received Cr 90

(Discount being received on defective supplies)

28-Jun Bank A/C Dr 7100

To Trade receivable Cr 7100

(Cheque being received for services provided)

29-Jun Bank Loan Dr 14000

Interest Paid Dr 340


(Repayment of Bank Loan)

30-Jun Salary A/C Dr 16500


(Salaries being paid for the month)

30-Jun Electricity Dr 450

To Electricity A/C payable Cr 450

(Bill received but not paid)

30-Jun Supplies Expense Dr 1500

To Supplies Cr 1500

(Inventory of Supplies)


5/18

LedgerDr. Bank A/C Cr.

Date Particular Amt. Date Particular Amt.01-Jun Share Capital 60,000 02-Jun By Rent A/C 2,500

01-Jun To Bank Loan 25,000 06-Jun By Equipment 15,000

19-Jun To Trade Receivable 14100 16-Jun By Supplies Payable 3,190

23-JunTo Unearned Revenue from

Services9800 27-Jun By Defective Supplies 620

28-Jun To Trade Receivable 7100 29-Jun By Bank Loan 14,000

29-Jun By Interest paid 340

30-Jun By Salaries 16,500

30-Jun By Bal C/D 63,850

116,000 116,000

Dr. Share Capital Cr.

Date Particular Amt. Date Particular Amt.

To Bal C/D 60,000 01-Jun By Cash A/C 60,000

60,000 60,000


6/18

Dr. Bank Loan A/C Cr.


29-Jun To Bank A/C 14000 01-Jun By Cash A/C 25000

To Bal C/D 11000

25000 25000

Dr. Equipment A/C Cr.


06-Jun To Bank A/C 15000

06-Jun To Computer A/C Payable 25000 By Bal C/D 40000

40000 40000

Dr. Computer A/C Payable Cr.


06-Jun Computer Equipment 25000 c/d 25000

25000 25000

Dr. Supplies Cr.


08-Jun Supplies Payable 3900 41820 Supplies Expense 1500

c/d 2400

3900 3900


7/18

Dr. Supplies Payable Cr.


16-Jun Bank A/C 3190 41798 Supplies 3900

16-Jun Defected Supplies 710

3900 3900

Dr. Defective supplies Cr.


27-Jun Bank A/C 620 41806 Supplies Payable 710

27-Jun Discount Received 90

710 710

Dr. Revenues from services Cr.


41800 Trade Receivables 29200

c/d 48600 41810 Trade Receivables 19400

48600 48600

Dr. Trade receivable Cr.


10-Jun Revenue from Services 29200 41809 Bank A/C 14100

20-Jun Revenue from Services 19400 41818 Bank A/C 7100

c/d 27400

48600 48600


8/18

Dr. Unearned Revenue Cr.


c/d 9800 41813 Bank A/C 9800

9800 9800

Dr. Discount received Cr.


c/d 90 41817 Defected Supplies 90

90 90

Dr. Rent A/C Cr.


02-Jun Bank A/C 2500 c/d 2500

2500 2500

Dr. Interest Paid Cr.


29-Jun Bank A/C 340 c/d 340

340 340


9/18

Dr. Salary A/C Cr.


30-Jun Bank A/C 16500 c/d 16500

16500 16500

Dr. Electricity A/C Cr.


30-Jun Electricity Expense 450 c/d 450

450 450

Dr. Electricity Bill Payable Cr.


c/d 450 41820 Electricity Expense 450

450 450

Dr. Supplies expense Cr.


30-Jun Supplies 1500 c/d 1500

1500 1500


10/18

Trial BalanceExplanation Debit Credit

Bank A/C 63850

Share Capital 60000

Bank Loan 11000

Equipment 40000

Computer A/C Payable 25000

Supplies 2400

Revenue from Services 48600

Trade Receivables 27400

Unearned Revenue 9800

Discount Received 90

Rent A/C 2500

Interest Paid 340Salary A/C 16500

Electricity A/C 450

Electricity Bill Payable 450

Supplies Expense 1500

154940 154940


11/18

P & L Account

Revenue

Revenue from Services 48600

Discount Received 90

48690

Expenses

Rent Expense 2500

Interest Expense 340

Salary Expense 16500

Electricity Expense 450

Supplies Expense 1500

21290

Net Profit 27400


12/18

Balance SheetEquity and Liabilities

Share Capital 60000

Reserves and Surplus: Retained Earnings 27400

Computer A/C Payable 25000

Unearned Revenue 9800

Electricity Bill Payable 450

Bank Loan 11000

133650

Assets

Computer Equipment 40000Bank A/C 63850

Supplies 2400

Trade Receivables 27400

133650


13/18

Retained Earnings

Opening Balance 0

AddNet Profit 27400

Amount Available 27400

Deduct Dividends 0

Ending Balance 27400

Implication of DividendThis 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.


14/18

CASE STUDY:FINDOMEGO.COM

Case revolves around a character named Amit who isthe Vice President, Sales and operation in the Indiaoffice of Findomego.com.

He is looking for advice from his Business School

professor, Mr. Sudipto Bhattacharya, to get out of amess 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)


15/18

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 tohim it was solely for companys benefit.

Negative points of Amits action:

a) Weak analysis.

b) He was desperate to meet his target and bonus forproviding 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 infavor of companys benefit, but he didnt had any experience ofthis kind of deal so, he must not have signed the contract on hisown without consulting any expert.


16/18

QUESTIONS:

2. What is your opinion, the Managing Directorspoint 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 contractotherwise was 15% of the quarterly target. But at the sametime company may compensate for this loss in future by thesame deal.

So, Managing Directors Point of view about revenuerecognition was short term as this reduction in quarterly targetof company can bring a negative effect on the stakeholders ofcompany.


17/18

QUESTIONS:

3. Do you agree with Amit that the companysprocedures could stifle innovation and risktaking?

Sol:The company always welcomes new ideas from theemployees but before signing any big contract, it is necessaryto discuss positives and negatives of the contract. Also makingthe 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'sprocedure is not going to affect the innovation and risk takingcapability rather it would keep the company free from any bigrisk.


18/18

QUESTIONS:

4. Draft a response from Professor Bhattacharya toAmit.

Sol:

Dear Amit,

As you were thinking in the favor of company so, youwasnt totally wrong. But you did your share of mistakes whilesigning the contract, by not consulting with your senior about thechanges in terms and conditions of the contract. So, I will suggestyou to accept this mistake done by you in front of your managingdirector instead of blaming company procedures or someone else

and then to seek for his advice to how to move further in thissituation.

Best Wishes

Sudipto Bhattacharya

Documents

Raghav Kapoor Software Limited Case