BEST, LONE PINE CAFE' CASE STUDY

Monday, May 1, 2023 G.H.P.I.B.M 1

MANAGERIAL ACCOUNTING

By – Mitesh Khakhar Chris Christian


Introduction to case

• As compared to the last case discussed on Kim fuller, sole proprietorship this one is unlike and differs in terms of ownership as it contents and introduces a case study on partnership firm

• The case introduces three partners• Mr. and Mrs. Henry Antoine and Mrs. Sandra

Landers


Partnership Contributions

• Each partner contributed $16000 cash on November 1, 2005

• Partnership deal was agreed upon sharing equal profit or loss

• The Antoine’s contributed through there savings

• Mrs. Landers contributed from all proceeds of her husband’s insurance policy


Additional Information….• Signed a 1 year lease for lone pine café, monthly rent was

$1500

• Took a loan of $21000 from local bank

• Bought equipments worth $53200 and incurred expenses $2800 for food and beverages

• Paid annual license fees of $1428 starting 1/11/2005

• Bought a new cash register worth $1400 on cash


Distribution of work

• Mr. Antoine worked as head cook

• Mrs. Antoine was also responsible for food, beverages and supplies, operated the cash register and was responsible for checking account

• Mrs. Antoine and Mrs. Landers waited, for customers


Unusual situations and scenario faced by the café’

• Restaurant operated through winter of 2005-2006, was not successful • On morning of March 31 2006, Mrs. Antoine discovers his husband

and Mrs. Landers are missing

• Mrs. Landers took her every belonging whereas Mr. Antoine had left behind most of his clothing

• They took cash register and all the cash it had

• Mrs. Antoine continued operating Lone pine Café, she asked Donald Simpson to make accounting statement on March 30 2006


Financial chart• Mrs. Antoine’s cash register had $311

• Amount of Cash register and cash can be accounted as withdraw in terms of Capital of both Mrs. Landers and Mr. Antoine.

• Checking account had $1030, plus ski instructor’s 870, so cash amounting $1900.

• Café owed $1583 to supplier

• so it will be a LIABALITY and will be CREDIT to CREDITOR account

• Food and beverages were estimated to be $2430

• This will be DEBIT to closing stock, an ASSET


Continuing…• Partnership paid $2100 of the loan

• Loan account will be DEBIT $2100

• Mrs. Antoine estimated depreciation of $2445 on Machinery

• This will be credit to Machinery account. So value of Machinery will be $50755

• Mr. Antoine left article’s worth $750, it is not related to Lone Pine café as it is personal entity and according to BUSINESS ENTITY CONCEPT


Opening balance sheet as on nov’2 2005 of lone pine café’ Q-1

Assets $ Liability $

Fixed assets Owners equity

Equipments 53200 Mr. AntoineMrs. AntoineMrs. Landers

160001600016000

Cash register 1400

Prepaid exp. 1428 Loan 21000

Cash on hand 10172

Closing stock 2800

Total 69000 Total 69000


Working notes for calculating ending balance sheet

• License fees paid on November 1st 2005 is $1498 –(less) $595 utilised till march 31st 2006 for 5 months

• Therefore $833 will be recorded as prepaid licence fees for the café’

• Unsecured loan incurred was $21000 out of which 2100 is already paid, So outstanding loan will amount to $18900


Additional..

• Cash register and its contents were taken away which will amount to $1400 of register and $311 along with the register

• Depreciation amount would be considered under fixed assets worth $2445

• Foods and beverages on hand were $2430• Checking account balance $1030 and cash

received from ski instructors was $870


Income statement for lone pine café’ during business tenure of 5 months

• Sales - $45296• less(-)• Food and beverages- $12000• Telephone and electricity- $ 5000• Rent - $ 7500• License - $595• Depreciation - $2445• Loss by theft- $1711• Salary - $5480• Payment to partners $21419

• NET LOSS - $10854


2: Balance sheet on March 30 2006

• Assets (all figures in $)• Equipments - 50755• Current assets- • Cash- 870• Checking a/c- 1030• Closing stock- 2430• Prepaid license- 833

• Total 55918

• Liabilities (all fig. in $)• Owners equity• Mr. Antoine- 11526.5• Mrs. Landers- 11526.5• Mrs. Antoine- 12382 • C. liabilities• Creditors 1583• Loan 18900• Total 55918


Q-3• If the partnership was dissolved on 31.3.2006,

disregarding the marital complications, the surplus left after selling the assets of the firm and paying of the liabilities amounted to $35435

• The partners would have been able to receive the same in proportion of there equity because in the event of dissolution of a partner-ship firm, the surplus realised is divided among the partners as business had been carried out for 5 long months.

BEST, LONE PINE CAFE' CASE STUDY

Economy & Finance

Transcript of BEST, LONE PINE CAFE' CASE STUDY