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Case Study Lone Pine Café: Balance Sheet
Case Study Lone Pine Café: Balance Sheet
Liability Liability
S.No Description Amount ($) Remarks S.No Description Amount ($) Remarks
1 Borrowing 21,000 From Bank 1 Borrowing 18,900 Out of 21,000 $ ,2100 $ is repaid
2 Supplier Payment 1,583
Capital Capital
S.No Description Amount ($) Remarks S.No Description Amount ($) Remarks
1 Mr. Antoine Capital 16,000 1 Mr. Antoine Capital 12,382
2 Mrs. Antoine Capital 16,000 2 Mrs. Antoine Capital 12,382
3 Mrs. Landers Capital 16,000 3 Mrs. Landers Capital 12,382
Assumptions:
1. The Balance Sheet was to be made as on 30th of March 2010. It is also mentioned that on the
morning of 31st of March, Mrs. Antoine discovered that the Cash Register and the cash it contained,
was missing. Thus we assume that the company had all its assets intact (including the cash register
and the money in it) till 30th of March.
2. There is no mention about the company taking any loan or credit.Thus the difference in the amount
of assets and (liability + owner's equity) is adjusted by subtracting the difference equally from each of
the owner's equity (As the entity is being dissolved, the liabilities will have a stronger claim against
the assets than equity).
3. Personal belongings/Assets of Mr.Antoine & Mrs Landers not considered in balance sheet as they
are not the assets of partnership.
Answer to third Question: As an answer to the third question, we feel that YES the partners would
have got their proportional values of equity calculated in the question 2, if the partnership was
dissolved on 30th March. This is because, as of 30th March all the companies assets were intact and
thus the value of the assets which was calculated would have been used to pay the liabilities first and
the rest of the money would have been equally distributed among the partners as their share of
equity. Only if the balance sheet would have been made on 31st of March that the stolen items would
have been considered and the respective amounts been deducted from the equity of the partners who
took it.
Cash Balance Calculation 2 November 2009
Opening Balance ($)(A)
Description Amount ($)
Parterner's Equity & Borrowing 69,000
(16,000$x3 +21,000 )
2
Calculation of Owner's Equity for the balance sheet as on 30th March
On 30th of March,
The total assets of the company had a value of $57,629
The total liabilities of the company had a value of $20,243
The initial amounts that three of the partners had put in as equity was $48,000
Thus, if we add the values of liability and the initial owner's equity values, we get a sum of $68,483 which exceeds the value
We know that in case an entity is dissolved, the Liabilities are a stronger claim against the assets than equity. Thus the owne
amounts for compensating the loss.
In the start of business it was agreed that the partnership would share the profits proportianally as per their contributed cap
contributed equal amounts as equity, the loss would also be shared equally. Thus one third of $10,854 which amounts to $36
the value of each of the owner's equity, which amounts to $12382.
An amount of $1,428 was paid for local operating licenses and good for one year beginning November 1.
As the business had operate for 5 months as on March 30th 2010, the value of 5 months of operation was calculated and dedu
amount ($833) was put as an asset.