TERNATE CAFE HOUSE On April 30, 2016, the partnership that had been set up a year ago to operate Ternate Café was dissolved due to marital complications. In connection with its dissolution, the preparation of the financial statements was required, The partnership was formed by the Valera couple, Erwin and Susan and Mrs. Ana Agas, who became close friends while serving as officers of the Cavite Chamber of Commerce and Industry. On May 2, 2015, each of the three partners contributed P160,000 cash to the partnership and agreed to split the profits in proportion to their capital contribution. The Valera's contribution came from their savings while that of Mrs. Agas came from the proceeds of her late husband's insurance policy. To augment the partnership funds, the partners secured a loan of P210,000 from a nearby rural bank. On the same day, the partners entered into a lease contract with the owner of the commercial building where the coffee shop was set-up. The space was at the ground floor of a 2-storey structure which is located in front of the Ternate town hall. The second floor of the building was occupied by doctors’ clinics, law offices, beauty shops and other establishments selling different gadgets and fashion accessories. Ternate was a coastal town and was one of the popular tourist destinations in Cavite. The lease contract stipulated that the monthly rent of the space was P6,500. Moreover, the partnership purchased equipment for P532,000, supplies and beverages for P28,000 and paid P14,280 for municipal and barangay licenses for one year. The remainder of the funds was deposited in a checking account with the rural bank. On the first week of June 2011, the partners formally opened the coffee shop. Mr. Valera was the cook, while the two women waited on customers. Mrs. Valera acted both as the purchasing officer and cashier of the coffee shop. The coffee shop attracted both the local residents and foreign tourists and backpackers visiting the nearby beaches . On the morning of April 30, 2016, Mrs. Valera found out that Mr. Valera and Mrs. Agas disappeared. No news had been published about their disappearance since then. The small cash box, content not known, was also missing. No other partnership assets were missing. Mrs. Valera, based on her intuition about her partners’ disappearance, unilaterally decided that the partnership had to be dissolved soon. For Mrs. Valera, it is business as usual. She decided to move on and continued to ‘operate coffee shop. She realized that an accounting would have to be done as of April 30, 2016, to avoid further complications. So, she availed of the services of Mr. Rey Morcilla, a friend who was a certified public accountant (CPA), to do the accounting job.Mrs. Valera disclosed to Mr. Morcilla that the cash register had P3,110 cash and a checking account balance or cash in bank of P10,300. Regular customers from the offices and stores above its shop owed the partnership P8,700. The coffee shop had outstanding payable to its suppliers totalling P'15,830. Mr. Morcilla estimated that the depreciation on the assets amounted to P24,450 while supplies and beverages inventory on hand was estimated to be worth P24,300. During the period of its operation, the partners drew salaries at agreed- upon amounts. The partnership had also repaid P21,000 of the bank loan.Mr.—-Morcilla explained that in order to determine the partners’ share of the capital, he would prepare the balance sheet as well as the profit and loss (P/L). He said that the P/L statement would show Mrs. Valera the result of the one-year operation, and thus help her decide whether or not to continue operating the business, sans the partnership, Mr. Morcilla, an alleged soulmate of Mrs. Valera, offered his accounting services free of charge. Apart from the information disclosed by Mrs. Valera, Mr. Morcilla found from receipts and transaction slips that, as of April 30, 2016, cash receipts from customers amounted to 434,800 while cash payments to various parties were as follows: Payments to partners ( distributed @ one-third each) 231,500 ‘Wages to employees 54,800 Interest payment. 5,400 Payment to suppliers 100,160 Telephone and electric bills paid 32,700, Miscellaneous expenses paid 2,550 Rental payments. 75,000 Prepare Ternate Café's Statements of Financial Condition as of May 2, 2015 and April 30, 2016 and Income Statement for the period ending April 30,2016. Advise Mrs. Valera what to do next with Temate Café.