Prepare corrected financial statements for Eagle Restaurant, Inc.: Income Statement, Statement of…

(Learning Objectives 4: Preparing financial statements; continue or shut down the business?) On October 1, Tiger Woods opened Eagle Restaurant, Inc. Woods is now at a crossroads. The October financial statements paint a glowing picture of the business, and Woods has asked you whether he should expand the business. To expand the business, Woods wants to be earning net income of $10,000 per month and have total assets of $35,000. Woods believes he is meeting both goals. To start the business, Woods invested $20,000, not the $10,000 amount reported as “Common stock” on the balance sheet. The business issued $20,000 of common stock to Woods. The bookkeeper plugged the $10,000 “Common stock” amount into the balance sheet to make it balance. The bookkeeper made some other errors too. Woods shows you the following financial statements that the bookkeeper prepared.

Required

Prepare corrected financial statements for Eagle Restaurant, Inc.: Income Statement, Statement of Retained Earnings, and Balance Sheet. Then, based on Woods’ goals and your corrected statements, recommend to Woods whether he should expand the restaurant.

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