Smokey Valley Cafe

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Case study-1 SMOKY VALLEY CAFE GROUP 7 (SEC B) Kevin D'Souza Lavanya Johri Shibin.K.T Varsha Hegde Dr.Srinath Bhat.Y Abhishek.M.V

Introduction to the case:

Introduction to the case This is based on the case argued befor Supreme court of the state of Oregon,28 th march 1950 Issue of SMOKY VALLEY CAFÉ’s partnership between Mrs.Beven and Mr&Mrs.Elmer Maywood. Mrs.BEVEN Mr. Elmer Mrs. Elmer

Capital And Allotments:

Capital And Allotments Mrs.Beven,Mrs.Elmer,Mr.Elmer each invested $2000 , Which amounted to $6000 . Mortgage of $16000 against down payment of $4500 . land Valued $2500 ,land improvements $2000 ,buildings $10500 , café equipment $1000. On Aug 12 th Smoky valley café was opened with $1500 cash in hand, investments of $16000 with mortgage loan of $11500 .

August 1946:

August 1946 Mr.Maywood took care of bar, Mrs. Maywood of dining room, Mrs.Beven the kitchen and accounts. Beer licence was grated to the café. A cheque of $35 was given as deposit for bottles and kegs. Meanwhile Mrs.Maywood was getting close to Mr.Fred a truck drive who was a regular visitor to café. Mr.Fred

October 1946:

October 1946 Partners decided to improve quality Decided to buy a new equipment Supplier refused to give credit. Bought the new equipment for cash of $415.95 Cash in hand reduced to ($1500-$35-$415.95) $1049.05

November 1946:

November 1946 Business was not improving. Cash balance was too low due to expense and expenditure. Mrs. Beven invested $400 towards the business as capital Capital of Mrs.Beven is now ($2000+$400) $2400 . Cash in hand in now $1449.05

December 1946:

December 1946 Mrs. Maywood fled away with Mr.Fred Mr.Maywood thereupon set out in a pursuit of a pair Mrs.Beven decided to resolve the partnership as she had no word from the other 2 partners. Final accounts were prepared by local accountant Mr.Bailey

Balance Sheet as on 12th August:

Balance Sheet as on 12 th August Balance sheet of Smoky Valley Cafe as on 12th August 1946 Liabilities Amount Assets Amount Mrs Bevan's Capital 2000.00 Cash & Bank 1500.00 Mr. Maywood's Capital 2000.00 Land 4500.00 Mrs. Maywood's Capital 2000.00 Building 10500.00 Mortgage Loan 11500.00 Equipments 1000.00 17500.00 17500.00

Profit and Loss A/C:

Profit and Loss A/C Appropiration of loss Profit/Loss Sharing Ratio 1:1:1 Mrs Bevan 329.34 Mr Maywoods 329.34 Mrs Maywoods 329.34 988.02 Profit & Loss Account of Smoky Valley Cafe as on 16th December 1946 Expenses Amount Income Amount Purchases 92.01 To Gross Profit b/f 7.99 By Closing Stock 100.00 100.00 100.00 To Depreciation 322.09 By Gross Profit b/d 7.99 To Other Expenses 673.92 By Net Loss b/f 988.02 996.01 996.01

Balance Sheet as on 16th december:

Balance Sheet as on 16 th december Balance sheet of Smoky Valley Cafe as on 16th December 1946 Liabilities Amount Assets Amount Capital 5411.98 Cash & Bank 75.13 Land 4455.55 Building 10266.55 Mortgage Loan 10800.00 Equipments 1371.76 Creditors 92.01 Closing Stock 100.00 Deposit 35.00 16303.99 16303.99

Equities after Dissolution:

Equities after Dissolution The Equites after Appropriating the losses Mrs. Bevan 2070.66 Mr. Maywoods 1670.66 Mrs. Maywoods 1670.66 Owner's Equity 5411.98

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