Will Gardner opened an Italian restaurant. Business has been good, and Gardner is considering expanding the restaurant. Gardner, who knows little accounting, produced the following financial statements for Little Italy, Inc., at December 31, 2016, the end of the first month of operations:

In these financial statements all amounts are correct, except for Owners' Equity. Gardner heard that total assets should equal total liabilities plus owners' equity, so he plugged in the amount of owners' equity at $49,000 to make the balance sheet come out even.
Requirement
1. Will Gardner has asked whether he should expand the restaurant. His banker says Gardner may be wise to expand if (a) net income for the first month reached $10,000 and (b) total assets are at least $35,000. It appears that the business has reached these milestones, but Gardner doubts whether the financial statements tell the true story. He needs your help in making this decision. Prepare a corrected income statement and balance sheet. (Remember that Retained Earnings, which was omitted from the balance sheet, should equal net income for the first month; there were no dividends.) After preparing the statements, give Will Gardner your recommendation as to whether he should expand the restaurant.

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A1 Little Italy, Inc. ncome Statement Month Ended December 31, 2016 2Sales revenue s一42.000 3Common stock 4 Total revenue 52,000 8,000 5,000 6 Accounts payable 7 Advertising expense 8 Rent expense 9 Total expenses 10 Net inc ome A1 Little Italy, Inc Balance Sheet December 31, 2016 2 Assets Cash Cost o S 12,000 f sales (expense 22,000 5,000 5Food inventory Furniture Total Assets 8 Liabilities 9None 10 Owners Equity $ 49,000