On October 1, Sue Skate opened a restaurant named Silver Skates Ltd. After the first month of operations, Skate is at a crossroads. The October financial statements paint a glowing picture of the business, and Skate has asked you whether she should expand Silver Skates. To expand the business, Sue Skate wants to be earning net income of $10,000 per month and have total assets of $35,000. Based on the financial information available to her, Skate believes she is meeting both goals.

To start the business, she invested $20,000, not the $10,000 amount reported as "Share capital" on the balance sheet. The bookkeeper plugged the $10,000 "Share capital" amount into the balance sheet to make it come out even. The bookkeeper made other mistakes too. Skate shows you the following financial statements that the bookkeeper prepared.

Requirements
Prepare a corrected income statement, statement of retained earnings, and balance sheet for Silver Skates Ltd. Then, based on your corrected statements, recommend to Sue Skate whether she should expand her business?

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Silver Skates Ltd Income Statement For the Month Ended October 31, 2017 2 Revenues: 3 Investments by owner 4 Unearned ban $20,000 3,000 t sales revenue $23,000 6 Expenses $ 5,000 4,000 3,000 1,000 7 Wages expense 8 Rent Se 9 Dividends Depreciation expense fixtures 13,000 $10,000 12 Net income (Net loss) Silver Skates Ltd Balance Sheet October 31, 2017 2 3 Cash 4 Prepaid insurance Liabilities: ble Assets $5,000 32,000 S 6,000 Accounts 1,000 Sales revenue 1,000 Accumulated depreciation- 3,000 5 Insurance e 6 Food invento 7 Cost of goods sold (expense 14,000 1,000 38,000 fixtures 8 Fixtures (tables, chairs, etc.) 19,000 Owners' equity 9 Dishes and silverware 10 4,000 Share capital 10,000 $ 48,000 48,000