Financial Forensics Quiz 1: 29 October 2023 (September 2023 term)

Based on the following case study, answer the given subquestions.
SMOKY VALLEY CAFÉ2
On 12 August 1946, three people, who had previously been employed to wait on tables in one of the cafes in Baxter, Oregon, formed a partnership. The eldest of the three was Mrs. Bevan, a middle-aged widow. The other two were Mr. and Mrs. Elmer Maywood. The partnership lasted for slightly more than four months, and in connection with its dissolution the preparation of a balance sheet became necessary.
Each of the partners contributed $2,000 cash, a total of $6,000. On 12 August, the partnership purchased the Smoky Valley Café for $16,000. The purchase price included land valued at $2,500, improvements to land at $2,000, building $10,500, and café equipment at $1,000. The partnership made a down payment of $4,500 (from its $6,000 cash) and signed a mortgage for the balance of the $16,000. The doors of the café were opened for business shortly after 12 August. One of the things that made this particular piece of property attractive to them was the fact that the building contained suitable living accommodations. One of the rooms was occupied by Mrs. Bevan and another by the Maywoods.
The Maywoods and Mrs. Bevan agreed on a division of duties and responsibilities which would allow them to keep the café open twenty four hours a day. They agreed that Mrs. Bevan would operate the kitchen, Mrs. Maywood would have charge of the dining room, and that Mr. Maywood would attend the bar. Mrs. Bevan agreed to keep the accounting records. She was willing to perform this task because she was vitally interested in making the business a success. She had invested the proceeds from the sale of her modest home and from her husband’s insurance policy in the venture. If it failed, the major part of her financial resources would be lost.
A beer license was granted by the state authorities. On August 15, the partnership sent a check for $35 to the distributor who supplied beer. This $35 constituted a deposit on bottles and kegs necessary for the operation of the bar and would be returned to the Smoky Valley Café after all bottles and kegs had been returned to the beer distributor. The Smoky Valley Café was located on a major highway, and a great deal of business was obtained from truck drivers. In October, the partners decided that to continue to offer their patrons quality food, they would have to add to their equipment. This new equipment cost $415.95, and because the supplier of the equipment was unimpressed with the firm's credit rating ,the equipment was paid for in cash.
The month of November did not improve the cash position of the business. In fact a cash balance became so low that Mrs. Bevan contributed additional cash to the amount of $400.00 to the business. She had hopes , however ,that the future would prove to be more profitable.

As on Aug 12$^{\text{th}}$, 1946 if a balance sheet is created, what are the total assets and liabilities as on Aug 12$^{\text{th}}$ respectively:

Based on the following case study, answer the given subquestions.
SMOKY VALLEY CAFÉ2
On 12 August 1946, three people, who had previously been employed to wait on tables in one of the cafes in Baxter, Oregon, formed a partnership. The eldest of the three was Mrs. Bevan, a middle-aged widow. The other two were Mr. and Mrs. Elmer Maywood. The partnership lasted for slightly more than four months, and in connection with its dissolution the preparation of a balance sheet became necessary.
Each of the partners contributed $2,000 cash, a total of $6,000. On 12 August, the partnership purchased the Smoky Valley Café for $16,000. The purchase price included land valued at $2,500, improvements to land at $2,000, building $10,500, and café equipment at $1,000. The partnership made a down payment of $4,500 (from its $6,000 cash) and signed a mortgage for the balance of the $16,000. The doors of the café were opened for business shortly after 12 August. One of the things that made this particular piece of property attractive to them was the fact that the building contained suitable living accommodations. One of the rooms was occupied by Mrs. Bevan and another by the Maywoods.
The Maywoods and Mrs. Bevan agreed on a division of duties and responsibilities which would allow them to keep the café open twenty four hours a day. They agreed that Mrs. Bevan would operate the kitchen, Mrs. Maywood would have charge of the dining room, and that Mr. Maywood would attend the bar. Mrs. Bevan agreed to keep the accounting records. She was willing to perform this task because she was vitally interested in making the business a success. She had invested the proceeds from the sale of her modest home and from her husband’s insurance policy in the venture. If it failed, the major part of her financial resources would be lost.
A beer license was granted by the state authorities. On August 15, the partnership sent a check for $35 to the distributor who supplied beer. This $35 constituted a deposit on bottles and kegs necessary for the operation of the bar and would be returned to the Smoky Valley Café after all bottles and kegs had been returned to the beer distributor. The Smoky Valley Café was located on a major highway, and a great deal of business was obtained from truck drivers. In October, the partners decided that to continue to offer their patrons quality food, they would have to add to their equipment. This new equipment cost $415.95, and because the supplier of the equipment was unimpressed with the firm's credit rating ,the equipment was paid for in cash.
The month of November did not improve the cash position of the business. In fact a cash balance became so low that Mrs. Bevan contributed additional cash to the amount of $400.00 to the business. She had hopes , however ,that the future would prove to be more profitable.

The cash balance as on Aug 12$^{\text{th}}$ 1946

Based on the following case study, answer the given subquestions.
SMOKY VALLEY CAFÉ2
On 12 August 1946, three people, who had previously been employed to wait on tables in one of the cafes in Baxter, Oregon, formed a partnership. The eldest of the three was Mrs. Bevan, a middle-aged widow. The other two were Mr. and Mrs. Elmer Maywood. The partnership lasted for slightly more than four months, and in connection with its dissolution the preparation of a balance sheet became necessary.
Each of the partners contributed $2,000 cash, a total of $6,000. On 12 August, the partnership purchased the Smoky Valley Café for $16,000. The purchase price included land valued at $2,500, improvements to land at $2,000, building $10,500, and café equipment at $1,000. The partnership made a down payment of $4,500 (from its $6,000 cash) and signed a mortgage for the balance of the $16,000. The doors of the café were opened for business shortly after 12 August. One of the things that made this particular piece of property attractive to them was the fact that the building contained suitable living accommodations. One of the rooms was occupied by Mrs. Bevan and another by the Maywoods.
The Maywoods and Mrs. Bevan agreed on a division of duties and responsibilities which would allow them to keep the café open twenty four hours a day. They agreed that Mrs. Bevan would operate the kitchen, Mrs. Maywood would have charge of the dining room, and that Mr. Maywood would attend the bar. Mrs. Bevan agreed to keep the accounting records. She was willing to perform this task because she was vitally interested in making the business a success. She had invested the proceeds from the sale of her modest home and from her husband’s insurance policy in the venture. If it failed, the major part of her financial resources would be lost.
A beer license was granted by the state authorities. On August 15, the partnership sent a check for $35 to the distributor who supplied beer. This $35 constituted a deposit on bottles and kegs necessary for the operation of the bar and would be returned to the Smoky Valley Café after all bottles and kegs had been returned to the beer distributor. The Smoky Valley Café was located on a major highway, and a great deal of business was obtained from truck drivers. In October, the partners decided that to continue to offer their patrons quality food, they would have to add to their equipment. This new equipment cost $415.95, and because the supplier of the equipment was unimpressed with the firm's credit rating ,the equipment was paid for in cash.
The month of November did not improve the cash position of the business. In fact a cash balance became so low that Mrs. Bevan contributed additional cash to the amount of $400.00 to the business. She had hopes , however ,that the future would prove to be more profitable.

On Aug 15$^{\text{th}}$ 1946, there was security deposit of 35$ for beer license. How will it impact the balance sheet: