1) Three partners - Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers - contributed $16,000 each to form a partnership called Lone Pine Café. 2) The café operated for 5 months from November 2005 to March 2006 but was not successful. On March 31, 2006, Mrs. Antoine discovered that Mr. Antoine and Mrs. Landers had taken the cash register and cash and disappeared. 3) An accounting statement prepared on March 30, 2006 showed the café had assets of $55,918, liabilities of $20,483, and each partner had an equity of $11,526.50 (Mrs. Antoine) or $11,526.

1. MANAGERIAL ACCOUNTING
Sunday, September 18, 2016 1G.H.P.I.B.M
By – Mitesh Khakhar
Chris Christian

2. 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
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3. 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
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4. 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
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5. 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
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6. 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
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7. 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
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8. 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
Sunday, September 18, 2016 8G.H.P.I.B.M

9. Opening balance sheet as on nov’2 2005 of lone pine
café’ Q-1
Assets $ Liability $
Fixed assets Owners equity
Equipments 53200 Mr. Antoine
Mrs. Antoine
Mrs. Landers
16000
16000
16000
Cash register 1400
Prepaid exp. 1428 Loan 21000
Cash on hand 10172
Closing stock 2800
Total 69000 Total 69000
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10. 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
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11. 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
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12. 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
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13. 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
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14. 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.
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15. Sunday, September 18, 2016 15G.H.P.I.B.M