Ahmed and his friend Ram started a food processing business called Great Foods in the year 2016. They had a factory on the outskirts of Bangalore and had distribution network across Bangalore. They brought in new business models where-in they provided opportunities for their channel partners to be entrepreneurs themselves. One such area was the distribution channel. In their distribution channel network, each agent was given liberty to act as an entrepreneur. Ravi was one such agent who distributed different products of Great Foods. The agreement between Great Foods and Ravi is such that Ravi had to invest a total of 535000/- for different assets. A mini truck costing 4 Lakhs and storing equipment worth 60,000/-. A mini freezer valued at 50,000/- and a billing machine valued at 5000/- and a starting cash balance of 20000/-. The mini truck is expected to run for six years after which it can be sold for 1 lakh. Storing equipment has a useful life of 4 years, mini freezer can be used for 2 years and the billing machine for 2 years. On 01 April 2020 Ravi signed the contract with Great foods to be a distribution agent for them. As per the agreement Ravi sourced all the assets mentioned above.

The agreement also stipulated other terms as follows: Ravi has to bear all expenses related to the distribution including fuel, repairs, toll and telephone expenses.

Great foods will pay Ravi commission on sales made through his distribution as follows on a monthly basis:

Net Sales (Sales less sales returns) per month Commission to Ravi Below 5,00,000/- 5% of total sales Between 5,00,000/- and 10,00,000/- 7.5% of total sales Above 10,00,000/- 10% of total sales

On the last day of June 2020, Ravi sat down with some of his pocket books in which he had written his accounts for the three months period. (01 April 2020 to 30 June 2020)

He found the following in them.

He had filled diesel in his mini truck 16 times during the three months time, from the petrol bunk. Each time he filled diesel for 3000/- and paid cash after a week. He had not yet paid for the last fill. He could sell products worth 3,24,000/- in the month of April, but products worth 12000/- was returned as the expiry date was over. In May, he sold products worth 6,00,500/-, but 8% of it was returned by the retailers. In June the sales was for 6,85,000/- and returns amounted to 15000/- He received entire commission for the three months from Great Foods. He incurred repairs and other expenses for 12,000/- He paid toll amounting 6000/- for a period of six months from 01 April 2020.

Analyse the above transactions and prepare the following for Ravis business: 1. Compute Ravis cash balance as on 30 June 2020 2. Calculate his total revenue for the three months. 3. Prepare his P&L account for the three month period (01 April to 30 June) considering all incomes and expenses including depreciation. 4. Make balance sheet at the end of June. 5. Give comments on his financial performance of this three months. EXHIBIT - I Balance Sheet as on 1/4/2020 Particulars Amount ASSETS Non Current Assets Mini Truck 400000 Storing equipment 60000 MiniFreezer 50000 Billing Machine 5000 515000 Current Assets Cash and Cash Equivalents 20000 Total Assets 535000

EQUITY AND LIABILITIES EQUITY Capital 535000 Total Equity 535000 LIABILITY 0 Total Equity and Liability 535000