Lone Pine Cafe

Topics: Balance sheet, Financial statements, Income statement Pages: 4 (933 words) Published: July 26, 2011
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Lone Pine Cafe. (A)*
On ~arch 31, 2006, the partnership that had been
orgamzed to operate the Lone Pine Cafe was dis­
solved under unusual circumstances and l'n
nectio . h' . ,con­ n WIt Its dIssolution, preparation of a bal­ ance sheet became necessary.

• Based on a case decided b th of Oregon (216 p. 2d 1005) ~ Pe ;upreme Court of the State Harvard Business School.' ro essor Robert N. Anthony,

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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 1,2005, each of
the three partners contributed $16,000 cash to the
partnership and agreed to share in the profits pro­
portionally to their contributed capital (i.e., one-
third each). The Antoines' contribution represented practically all of their savings. Mrs. Landers' pay­ ment was the proceeds of her late husband's insur­ ance policy. On that day also the partnership signed a one­ year lease to the Lone Pine Cafe, located in a nearby recreational area. The monthly rent on the cafe was $1,500. This facility attracted the partners in part be­ cause there were living accommodations on the floor above the restaurant. One room was occupied by the Antoines and another by Mrs. Landers. The partners borrowed $21,000 from a local bank and used this plus $35,000 of partnership funds to buyout the previous opl'rator of the cafe. Of this amount, $53,200 was for equipment and $2,800 was for the food and beverages then on hand. The partnership paid $1,428 for local operat­ ing licenses, good for one year beginning Novem­ ber I, and paid $1,400 for a new cash register. The remainder of the $69,000 was deposited in a check­ ing account. Shortly after November I, the partners opened the restaurant. Mr. Antoine was the cook, and Mrs. Antoine and Mrs. Landers waited on customers. Mrs. Antoine also ordered the food, beverages, and supplies, operated the cash...
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