On October 1, 2018, Elise Pulito opened Tree City Cafe, Inc. Pulito is now at a crossroads.


On October 1, 2018, Elise Pulito opened Tree City Cafe, Inc. Pulito is now at a crossroads. The October financial statements paint a glowing picture of the business, and Pulito has asked you whether she should expand the business. To expand the business, she wants to be earning net income of $10,000 per month and have total assets of $50,000. Pulito believes she is meeting both goals.

To start the business, Pulito 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 Pulito. The bookkeeper “plugged” the $15,000 “Common stock” amount into the balance sheet to make it balance. The bookkeeper made some other errors, too. Pulito shows you the following financial statements that the bookkeeper prepared:

A1 Tree City Cafe, Inc. Income Statement Month ended October 31, 2018 2 Revenue: $25,000 3,000 Investments by owner 3 Un

A1 Tree City Cafe, Inc. Balance Sheet October 31, 2018 Assets Liabilities $ 8,000 Accounts payable 1,000 Sales revenue 1

1. Prepare corrected financial statements for Tree City Cafe: single-step Income Statement, Statement of Retained Earnings, and Balance Sheet. Then, based on Pulito’s  goals and your corrected statements, recommend to Pulito whether or not she should  expand the coffee shop.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For  answer-question

Financial Accounting

ISBN: 978-0134725987

12th edition

Authors: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

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