On October 1, Lou Marks opened Eagle Restaurant, Inc. Marks is now at a crossroads. The October financial statements paint a glowing picture of the business, and Marks has asked you whether he should expand the business. To expand the business, Marks wants to be earning net income of $10,000 per month and have total assets of $50,000. Marks believes he is meeting both goals.
To start the business, Marks invested $25,000, not the $15,000 amount reported as Common stock on the balance sheet. The business issued $25,000 of common stock to Marks. The bookkeeper plugged the $15,000 Common stock amount into the balance sheet to make it balance. The bookkeeper made some other errors too. Marks shows you the following financial statements that the bookkeeper prepared:

Requirement
1. Prepare corrected financial statements for Eagle Restaurant, Inc.: Income Statement, Statement of Retained Earnings, and Balance Sheet. Then, based on Marks goals and your corrected statements, recommend to Marks whether he should expand therestaurant.

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Eagle Restaurant, Inc. Income Statement Month Ended October 31, 2011 Revenues: Investments by owner Unearned banquet sales revenue $25,000 3,000 S28,000 Expenses: Wages expense Rent expense Dividends Depreciation expense-fixtures S 5,000 4,000 3,000 1,000 ... 13,000 $15,000 Net inco Eagle Restaurant, Inc. Balance Sheet October 31, 2011 Assets: Liabilities: 8,000 Accounts payable S 7,000 32,000 Prepaid insurance Insurance ex Food invento Cost of goods sold (expense. Fixtures (tables, chairs, etc.) 1,000 Acuumulated depreciation- 5,000 fixtures pense 1,000 40,000 ..12,000 24,000 Owners' equity Dishes and silverware.1.000 55,000 15,000 $55,000 Common stoc