CC12 COOKIE CREATIONS
(a) 1. A formalized partnership agreement is imperative. A formal agreement
will ensure that you consider all possible situations, contingencies,
and disagreements that could arise. At present, you may be in agree–
ment with all the decisions being made. However, if a disagreement
occurs later on, you will be able to turn to the partnership agreement
for guidance.
2. Katy Peterson would need to borrow $10,300.
Total fair value of Cookie Creations’ net assets:
($12,000 + $800 + $1,200 + $1,000) …………………………. $15,000
CC12 (Continued)
(a) (Continued)
3. Both the total amount of assets and the total amount of Katy
Peterson’s debt should be considered in making this decision. Each
partner is jointly and severally liable for all partnership liabilities. If you
go forward with the partnership, both partners will be signing the lease
agreement. This debt will be in addition to the notes payable (bank loan),
partnership.
4. Before becoming a partner with Katy Peterson, you (Natalie Koebel)
should ask to see the financial statements of The Baker’s Nook to
assess its profitability. You should also consider what benefits (if any)
CC12 (Continued)
(b) COOKIE CREATIONS AND MORE
Balance Sheet
November 1, 2017
Assets
Current assets
Cash …………………………………………………………………. $23,800*
Accounts receivable ………………………………………….. $ 6,800
Liabilities and Owners’ Equity
Current liabilities
Notes payable ……………………………………………………. $10,000
Owner’s equity
K. Peterson, Capital ………………………………………….. $15,000
N. Koebel, Capital ……………………………………………… 15,000 30,000
Total liabilities and owners’ equity ………………….. $40,000