The partnership was formed by Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers, who had become acquainted while working in a Portland, Oregon, restaurant. On November 1, 2009, each of the three partners contributed $16,000 cash to the partnership and agreed to share in the profits proportionally to their contributed capital (i.e., one-third each). The Antoine's’ contribution represented practically all of their saving. Mrs. Landers’ payment was the proceeds of her late husband’s insurance policy.

1. Lone pine café case study
Thanks to: Dr Ashish C. Mehta
Presented by: Mayur Fofandi
Omkar Mishra
Amit Singh
Nitish Kumar
Saurabh Makwana

2. Introduction
 Lone pine café was owned by Mr. and Mrs. Henry Antoine and
Mrs. Sandra Landers.
 On Nov 1,2005 each of three partners contributed $16,000 cash
and agreed to share the profit proportionally.
 Mr. and Mrs. Antoine’s contribution consist of their savings and
Mrs. Landers contribution consist of proceeds of her late
husband’s insurance policy.
 The monthly rent of café was $1500.
 The partners borrowed $21,000 from local bank and used this plus
$35,000 of partnership funds to buy out the previous operator of
café.

3. •Out of this $56,000,$53,000 was for equipment and $2800 was
for food and beverages.
•They paid $1428 for local operating license for one year.
•Mr. Antoine was the cook and Mrs. Antoine and Mrs. Landers
waited on the customers.
•Mrs. Antoine also ordered the food, beverages and operated the
cash register.
•She was also responsible for checking account.
•The café operated throughout the winter season but it was not
very successful.
•On morning of March 31,2006,Mrs Antoine discovered that Mr.
Antoine and Mrs. Landers disappeared.

4. •Mrs. Landers had taken all her possessions but Mr. Antoine had left
most of his clothing.
•The new cash register and its content were missing.
•On March 31,2006 the partnership has been dissolved.
•But irrespective of that ,Mrs. Antoine decided to continue
operating the Lone pine café.
•So she called Donald Simpson who was having enough accounting
knowledge to do the accounting till March 30.
•Mrs. Antoine informed that the cash register has contained $311 and
checking account balance was $1030.
•The ski instructors who were permitted to charge their meals had
run up accounts totaling $870.

5. I
•The clothing that Mr. Antoine left behind was estimated to be
worth $750.
•Mr. Simpson told that in order to account for partner’s equity,
he would have to prepare a balance sheet.
•At the end each partner would be entitled to one-third of the
amount.

6. Accounting and non- accounting
information
 Accounting information: Accounting information is data about a
business entity's transactions. Accounting is a method of
identifying and recording this data and using it to generate useful
reports for a variety of users. These users are generally classified
into two groups internal users and external users.
 Non-accounting information: A bank also has non-accounting
information before giving a decision to prospective debtors in
lending loans. The discussion in this study focuses on accounting
information on whether it can be used to predict a credit decision
taken by the bank. Non-accounting information is a control
variable in this study.

7. Accounting concepts
 Dual aspect: The dual aspect concept states that every business transaction
requires recordation in two different accounts. This concept is the basis of
double entry accounting, which is required by all accounting frameworks in
order to produce reliable financial statements.
 Money measurement concept: The transactions and events that are capable of
being measured in monetary terms are recognized in the financial statements.
 Matching concept: The matching concept is an accounting practice whereby
firms recognize revenues and their related expenses in the same accounting
period. The purpose of the matching concept is to avoid misstating earnings for
a period.
 Accrual concept: Accrual concept is the most fundamental principle of
accounting which requires recording revenues when they are earned and not
when they are received in cash, and recording expenses when they are incurred
and not when they are paid.

8. LONE PINE CAFÉ
The
Partners:
Mr.
Antoine
Mrs.
Antoine
Mrs.
Landers

9.  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.

10. Questions 1:
Prepare a Statement of Financial Position for the Lone Pine
Café as of November 2, 2005.

11. Transactions in Nov 2, 2005
Initial Partner’s Contribution $ 48,000 consists of:
 - Mr. Antoine = $ 16,000
 - Mrs. Antoine = $ 16,000
 - Mrs. Landers = $ 16,000
 Transactions in Nov 2, 2009
Bank Loan = $ 21,000
Second Equipment = $ 53, 200
Foods & Beverages = $ 2,800
Local Operating License (for 1 year) = $ 1,428
New Cash Register = $ 1,400
The remainder of total money will be deposited in checking account
Mr. Antoine & Mrs. Landers were disappeared on the morning of March
02, 2006.
Business was not successful.
The Court affirmed the partnership was dissolved as of March 30, 2006.

12. Opening balance sheet of Lone Pine Café
As of 2nd November,2005 (Figure in $)
Assets Amount Liabilities Amount
Current assets Current liabilities
Cash register 1,400 Loan taken from bank 21,000
Food and beverages 2,800
Pre-paid license fees 1,428 Owners equity
Checking account 10,172 15,800 Mr. Antoine 16,000
Mrs. Antoine 16,000
Fixed assets Mrs. Landers 16,000 48,000
Equipment 53,200
69,000 69,000

13. Checking Account Balance calculation:
= Total Incoming Cash – Total Outgoing Cash
= (Partner’s Capital + Bank Loan) –(Equipment + Foods &
Beverages + Licenses + Cash Register)
= ( $ 48,000 + $ 21,000) – ($ 53,200 + $ 2,800 + $ 1,428 + $ 1,400)
= ( $69,000) – ($ 58,828)
= $ 10,172

14. Questions 2:
Prepare a Statement of Financial Position as of March
30, 2006.

15. Transaction effecting on march 30,
2006
Conditions after “The Disappearance of Mr. Antoine and Mrs.
Landers” (until March 30)
 Cash register contained $ 311
 Checking account balance $ 1,030
 A/R: Servicing Ski Instructor $ 870
 Owed Suppliers $ 1,583
 Asset Depreciation $ 2,445
 Food and Beverages on hand $ 2,430
 Partners drew salaries at agreed-upon amounts
 Clothes left by Mr. Antoine $ 750
 Repaid the bank loan $ 2,100

16. Closing Balance sheet of Lone Pine Café
As on March 30, 2006 (Figure in $)
ASSESTS AMOUNT LIABILITIES AMOUNT
Current assets Current liabilities
Cash 1,341 Account payable 1,583
Account receivable 8,70 Non current liabilities
Food and beverages 2,430 Bank loan 18,900
Prepaid expense 5,95 Total liabilities 20,483
Mr. Antoine’s clothes 7,50
Total current assets 5,986 Owner’s equity
Fixed assets Mr. Antoine 12,552
Equipments 54,600 Mrs. Antoine 12,552
Less estimated Depreciation
(2,445)
Mrs. Landers 12,552
Total fixed assets 52,155 Total equity 37,658
Total assets 58,141 Total liabilities and equity 58,141

17. WORKING NOTES
Total Cash:
= Cash in Cash Register + Checking Account
= $ 311 + $ 1,030
= $ 1,341
Prepaid Expense:
= $ 1,428 *5/12
= $ 595
 Total Capital of 3 Partners:
= Total Assets – (Total Liabilities)
= (Cash+ A/R+ Foods & Bev+ Prepaid Expense+ Mr. Antoine’s clothes+ Equipment) –
(Account Payable + Bank Loan)
= ($ 1,341 + $ 870 + $ 2,430 + $ 5,95 + $ 750 + ($54600-$2445) ) – ($ 1,583 + ($ 21,000 - $ 2,100) )
= ($58,141) - ($20,483)
= $ 37,658
= $ 12,552 for each Partner
 Equipment includes cash register ($53,200+ $1400= $54,600)
 Assumed that personal clothing's of Mr. Antoine, now belongs to the firm. Used in any
manner liked by organization

18. Questions 3:
Disregarding the marital complications, do you suppose that
the partners would have been able to receive their
proportional share of the equity determined in Question 2 if
the partnership was dissolved on March 30, 2006? Why?

19. Liquidation
Liquidation in finance and economics is the process of bringing a
business to an end and distributing its assets to claimants.
Liquidation is nothing but the process by which the company’s
business is brought to an end and the company is dissolved. All
the assets which belong to the company are distributed amongst
its creditors, lenders, shareholders, etc. on the basis of seniority of
claims.
Liquidation Value Formula = Liquidation Value of Assets –
Liquidation Value of Liabilities

20. If the Partnership was dissolved on March 30, 2006. The Partners would not been able to
receive their proportional share of the equity shown in the Statement of Financial Position,
because:
-Their assets will not bring enough cash to pay the liabilities and Partners. Below is
liquidation value estimation for Lone Pine Café on forced sale.
-For equipment, General Rate of Depreciation is 15%. In addition, 20% Depreciation will be
available in the first year for Cafe. However, if assets used for less than 180 days, then ½ of
35%(15% Normal Depreciation +20% Additional Depreciation) will be available
LIQUIDATION VALUE ESTIMATION
Assets
Current
Statement of Financial
Position
Assumed
Recovery Liquidation Value
Mr. Antoine’ clothes $750 0% $0
Cash $1,341 100% $1,341
Account Receivable $870 100% $870
Inventory $2,430 0% $0
Prepaid Expense $833 0% $0
Café Equipment $53,200 35% $18,620
TOTAL $58,141 $20,831

21. - The Lone Pine Café has obligation to precede payment
to secured creditor (in this case is Bank), then
payment to unsecured creditor (in this case is
Supplier).
Payment to Partners/Shareholders will be placed in
the final sequence therefore we suppose that it is very
unlikely the Partners would have been able to receive
their proportional share of the equity ($ 12,382 each)
as determined in Statement of Financial Position as of
March 30, 2006.

22. Assumption that can be taken
 The three partners lived above the
café, so they were entitled to give the
rent of the premises.
 The trio of partners did not hire any
workers in the organization so they are
entitled to get salaries.
 One of the key prepositions of the
business are two beautiful ladies
waiting for the customers. In the case
Mrs. Antoine and Mrs. Landers waited
for customers.
 There were no formal business deed
signed between the partners. Because
of that the liquidation process was
carried In equal proportion of there
capital.