Synopsis LONE PINE CAFE

1)They would not be able to recover their investments of $16,000 each as the loss i.e.
$10,850 would have to be suffered equally by all the partners.

Also they have to pay back the bank loan that would again reduce the net returns on their
investments

2)A net loss of $10,854, shows that the company is not performing well. We can also
understand that the $23150 salary taken by the owners could be drawings thus than the
company comes under profit.

3)Expenses can be cut down if proper management is done. Over stocking is also one of the
problems which increases the cost for the company.

4)Sales are upto mark, but still the company is not able to recover its cost, this is mainly
because of no check on expenses.

5)The firm is also maintaining very low balance of cash in hand, which can lead to problem
for the company in the future to meet its daily expenses.

If Mrs. Antoine continues with the business, she has to keep check on the expenses such as
telephone expenses ($3270), salary,wages and rent of the café.

6) Total Liabilities = Bank Loan + Capital + Creditors

= 18,900 + 48,000 – 10,854 + 1,583

= 57,629

7) Total Assets = Fixed Assets+Current Assets

= 57,629