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.

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