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SOLUTION FOR LONE PINE CAFE CASE:

A)Each of the partners contributed !"### cash to the


partnership and a$reed to share in their profits
proportiona%%& to 'hat the& had in(ested 'hich a)ounts to
!*+rd of the tota% profit,
Therefore- each O'ner.s e/uit& : !"### cash
The& si$ned a one &ear %ease at a nearb& cafe ca%%ed the
Lone pine cafe and a$reed to pa& a rent of !0## e(er&
)onth,
The partners borro'ed 1!### fro) the ban2 , The& used
+0### out of their partnership )one& and %oan fro) the
ban2 to bu& e/uip)ents 'orth 0+1## p%us 13## for
In(entor& 4 food and be(era$es),

A%so the& paid additiona%%& !513 for %oca% operatin$ %icense
and !5## for a ne' cash re$ister,
Thus the )one& re)ainin$ fro) their partnership account
is :
o 53###6 4 +0###7!5137!5##)8 !#!91
Lone Pine Cafe
Statement of Financial Position
As of Nov 2nd, 2009

Assets Liabilities

Cash 10172 Payable to Bank 21000
Inventory 2800
Prepaid license
expense 1428

otal c!rrent assets 14400 otal liability 21000

"on c!rrent assets# $%ner&s '(!ity#
)r* Antoine&s'(!ity 1+000
Property, plant and
e(!ip-ent ./200 )rs* Antoine&s '(!ity 1+000
Cash re0ister 1400
)rs* 1andra Lander&s
'(!ity 1+000
otal .4+00 otal '(!ity 48000

otal Assets# +2000
otal liabilities and
o%ner&s '(!ity +2000
:) On ;arch +!
st
- 1#!#- ;rs Antoine disco(ered that ;r
Antoine and ;rs %anders 'ere )issin$,
She considered the partnership to be disso%(ed and thus
brou$ht in an accountant to reso%(e the )atter,
;r Antoine and ;rs %anders had ta2en a'a& the cash re$ister
p%us +!! cash in it,
Thus tota% e/uip)ent cost 8 4 05"##6!5##)
8 0+1##
Thus tota% %oss8 cost of cash re$ister 7 cash in it
8 4 !5## 7 +!!)
8 !9!!
There fore-
;r Antoine 'ithdra'a%s8 !9!!*18 300,0#
;rs %anders 'ithdra'a%s8 !9!!*18 300,0#
Chec2in$ account ba%ance8 !#+#
S2i instructor.s pa&)ent8 39#
Tota% cash 8 !<##
;r Si)pson 4 The accountant ) ca%cu%ated the depreciation on
the e/uip)ent to be 1550,
Net cost of e/uip)ent8 4 0+1##61500)8 0#900
Lone Pine caf= o'ed supp%iers 8 !03+
Food and be(era$es on hand 'ere esti)ated to be about
15+#,
In(entor& 8 15+#
The partnership had repaid 1!## of the %oan fro) :an2,
Thus %oan re)ainin$: 4 1!###61!##)8 !3<##
The prepaid %oca% operatin$ e>pense had been used for 0
)onths, Thus this shou%d be subtracted fro) the re)ainin$
a)ount,
!513*!18 !!< per )onth
For 0 )onths: !!<? 0 8 0<0
A)ount re)ainin$: 4 !51360<0) 8 3++
@urin$ the period of the operations- the partners 'ithdre'
a$reed upon sa%aries and these pa&)ents 'ere upto date,
;r Antoine %eft behind his c%othes 'hich 'ere esti)ated to be
about 90#,
;r Si)pson thus prepared a ba%ance sheet as of ;arch +#
th

1#!#, Ae %isted the ite)s the& o'ned as of ;ar +#
th
- %isted the
ite)s the& o'ed and the ba%ance 'as di(ided a)on$ the three
e/ua%%& as e/uit&,
Lone Pine Cafe
Statement of Financial Position
As of Mar 30th, 2010

Assets Liabi%ities

Cash !<## Pa&ab%e to :an2 !3<##
In(entor& 15+# Loan fro) %oca% supp%iers !03+
Prepaid e>pense 3++

Tota% Current assets 0!"+ Tota% Liabi%it& 1#53+

Non current assets: O'nerBs E/uit&
;r AntonieBs E/uit& !1+31
E/uip)ent 0+1## ;rs, AntoineBs E/uit& !1+31
Less: Accu)u%ated
depreciation 61550 ;rs, LanderBs e/uit& !1+31
;r AntonieBs 'ithdra'a% 6300
;rs %andersBs 'ithdra'a% 6300
Tota% 0#900 Tota% E/uit& +05+0

Tota% Assets: 00<!3
Tota% Liabi%ities and O'nerBs
E/uit&: 00<!3
c) Ce see fro) the ba%ance sheets that their partnership 'ou%d
not ha(e been ab%e to recei(e their proportiona% share of e/uit&
disre$ardin$ the )arita% co)p%ications,