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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





FORM 10-Q





|                                                  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES    EXCHANGE ACT OF 1934 
|------------------------------------------------- | -------------------------------------------------------------------------------------------
|                                                  |                                                                                            
|FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
|                                                  |                                                                                            
|                                                  | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES    EXCHANGE ACT OF 1934
|                                                  |                                                                                            
|Commission File    Number:     33-69996          




COMMONWEALTH  INCOME & GROWTH FUND II


(Exact name of registrant as specified in its  charter)





|Pennsylvania                                                   |  | 23-2795120                             
|-------------------------------------------------------------- |  | ---------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               |  |                                        
|470 John Young Way  Suite 300                                 
|Exton, PA 19341                                               
|(Address, including zip code, of principal executive offices) 
|                                                              
|(610) 594-9600                                                
|(Registrants telephone number including area code)           




Indicate by  check mark whether the registrant (i) has filed all reports required to be  filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the  preceding 12 months, and (ii) has been subject to such filing requirements for  the past 90 days:





YES           NO





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Commonwealth Income  & Growth Fund II


Balance Sheets





|                                                                                                                                        |  | September 30,    2003 |            | December 31,    2002 |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ---------- | -------------------- | -
|                                                                                                                                        |  |                       |            |                      |  
|                                                                                                                                        |  | (unaudited)           |            |                      |  
|Assets                                                                                                                                  |  |                       |            |                      |  
|Cash and cash equivalents                                                                                                               |  | $                     | 265,656    |                      | $
|Lease income receivable,    net of allowance for doubtful accounts reserve of $91,059 as of September 30,    2003 and December 31, 2002 |  |                       | 2,488      |                      |  
|Net investment in direct    financing leases                                                                                            |  |                       | 162,070    |                      |  
|Other receivables -    affiliated limited partnerships                                                                                  |  |                       | 11,509     |                      |  
|Prepaid expenses                                                                                                                        |  |                       | 6,700      |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|                                                                                                                                        |  |                       | 448,423    |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|Computer equipment, at    cost                                                                                                          |  |                       | 5,532,967  |                      |  
|Accumulated depreciation                                                                                                                |  |                       | (3,831,623 | )                    |  
|                                                                                                                                        |  |                       |            |                      |  
|                                                                                                                                        |  |                       | 1,701,344  |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|Equipment acquisition    costs and deferred expenses, net                                                                               |  |                       | 57,214     |                      |  
|Accounts receivable,    Commonwealth Capital Corp                                                                                       |  |                       | 216,188    |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|                                                                                                                                        |  |                       | 273,402    |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|Total    assets                                                                                                                         |  | $                     | 2,423,169  |                      | $
|                                                                                                                                        |  |                       |            |                      |  
|Liabilities    and Partners Capital                                                                                                    |  |                       |            |                      |  
|Liabilities                                                                                                                             |  |                       |            |                      |  
|Accounts payable                                                                                                                        |  | $                     | 53,008     |                      | $
|Accounts payable - General    Partner                                                                                                   |  |                       | 29,541     |                      |  
|Other accrued expenses                                                                                                                  |  |                       |           |                      |  
|Unearned lease income                                                                                                                   |  |                       | 96,298     |                      |  
|Notes payable                                                                                                                           |  |                       | 957,364    |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|Total    liabilities                                                                                                                    |  |                       | 1,136,211  |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|Partners    Capital                                                                                                                    |  |                       |            |                      |  
|General partner                                                                                                                         |  |                       | 1,000      |                      |  
|Limited partners                                                                                                                        |  |                       | 1,285,958  |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|Total    partners capital                                                                                                              |  |                       | 1,286,958  |                      |  
|                                                                                                                                        |  |                       |            |                      |  
|Total    liabilities and partners capital                                                                                              |  | $                     | 2,423,169  |                      | $
|                                                                                                                                        |  |                       |            |                      |  




see accompanying notes to financial  statements


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Commonwealth Income & Growth Fund II


Statements of Operations





|                                                                                                    |  | Three Months Ended    September 30, |         | Nine Months Ended    September 30, |  
|--------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------- | ---------------------------------- | -
|                                                                                                    |  | 2003                                |         | 2002                               |  
|                                                                                                    |  |                                     |         |                                    |  
|                                                                                                    |  | (unaudited)                         |         | (unaudited)                        |  
|Income                                                                                              |  |                                     |         |                                    |  
|Lease                                                                                               |  | $                                   | 300,754 |                                    | $
|Interest and other                                                                                  |  |                                     | 379     |                                    |  
|Gain on sale of computer equipment                                                                  |  |                                     |        |                                    |  
|                                                                                                    |  |                                     |         |                                    |  
|Total    income                                                                                     |  |                                     | 301,133 |                                    |  
|                                                                                                    |  |                                     |         |                                    |  
|Expenses                                                                                            |  |                                     |         |                                    |  
|Operating, excluding    depreciation                                                                |  |                                     | 90,042  |                                    |  
|Equipment management fee -    General Partner                                                       |  |                                     | 15,038  |                                    |  
|Interest                                                                                            |  |                                     | 19,417  |                                    |  
|Depreciation                                                                                        |  |                                     | 229,315 |                                    |  
|Amortization of equipment    acquisition costs and deferred expenses                                |  |                                     | 16,359  |                                    |  
|Bad debt expense                                                                                    |  |                                     |        |                                    |  
|Loss on sale of computer    equipment                                                               |  |                                     | 13,414  |                                    |  
|                                                                                                    |  |                                     |         |                                    |  
|Total    expenses                                                                                   |  |                                     | 383,585 |                                    |  
|                                                                                                    |  |                                     |         |                                    |  
|Net    (loss) income                                                                                |  | $                                   | (82,452 | )                                  | $
|                                                                                                    |  |                                     |         |                                    |  
|Net    (loss) income per equivalent limited partnership unit                                        |  | $                                   | (0.18   | )                                  | $
|                                                                                                    |  |                                     |         |                                    |  
|Weighted    Average number of equivalent limited partnership units outstanding during the    period |  |                                     | 460,067 |                                    |  
|                                                                                                    |  |                                     |         |                                    |  




see accompanying notes to financial  statements


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Commonwealth Income  & Growth Fund II


Statements of Partners  Capital





|                                          |  | For the Nine Months Ended September 30, 2003 |   
|----------------------------------------- |  | -------------------------------------------- | --
|                                          |  | (unaudited)                                  |   
|                                          |  | GeneralPartner    Units                      |   
|                                          |  |                                              |   
|Partners    capital - December 31, 2002  |  |                                              | 50
|Net    income                             |  |                                              |   
|Distributions                             |  |                                              |   
|                                          |  |                                              |   
|Partners    capital  September 30, 2003 |  |                                              | 50
|                                          |  |                                              |   




see accompanying notes to financial  statements


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Commonwealth Income  & Growth Fund II


Statements of Cash Flow


For the Nine Months Ended September  30, 2003 and 2002





|                                                                                           |  | 2003        |          | 2002 |  
|------------------------------------------------------------------------------------------ |  | ----------- | -------- | ---- | -
|                                                                                           |  |             |          |      |  
|                                                                                           |  | (unaudited) |         
|Operating activities                                                                       |  |             |          |      |  
|Net income (loss)                                                                          |  | $           | 216,705  |      | $
|Adjustments to reconcile    net income (loss) to net cash provided by operating activities |  |             |          |      |  
|Depreciation    and amortization                                                           |  |             | 778,595  |      |  
|Amortization    of unearned lease income                                                   |  |             | (8,213   | )    |  
|(Gain)    loss on sale of computer equipment                                               |  |             | (304,905 | )    |  
|Other    noncash activities included in determination of net income (loss)                 |  |             | (780,517 | )    |  
|Changes    in assets and liabilities                                                       |  |             |          |      |  
|Decrease    (increase) in assets                                                           |  |             |          |      |  
|Lease    income receivable                                                                 |  |             | 407,028  |      |  
|Minimum    lease receivables                                                               |  |             | 2,237    |      |  
|Other    receivables, affiliated limited partnerships                                      |  |             | (3,075   | )    |  
|Prepaid    expenses                                                                        |  |             | (481     | )    |  
|(Decrease)    increase in liabilities                                                      |  |             |          |      |  
|Accounts    payable                                                                        |  |             | (19,650  | )    |  
|Accounts    payable, General Partner                                                       |  |             | 2,084    |      |  
|Other    accrued expenses                                                                  |  |             | (7,362   | )    |  
|Unearned    lease income                                                                   |  |             | (100,767 | )    |  
|                                                                                           |  |             |          |      |  
|Net cash    provided by operating activities                                               |  |             | 181,679  |      |  
|                                                                                           |  |             |          |      |  
|Investing    activities:                                                                   |  |             |          |      |  
|Capital expenditures                                                                       |  |             | (15,000  | )    |  
|Net proceeds from the sale    of computer equipment                                        |  |             | 404,175  |      |  
|Long term unearned lease    income                                                         |  |             | 32,586   |      |  
|Equipment acquisition fees    paid to General Partner                                      |  |             | (600     | )    |  
|                                                                                           |  |             |          |      |  
|Net cash    provided by investing activities                                               |  |             | 421,161  |      |  
|                                                                                           |  |             |          |      |  
|Financing    activities:                                                                   |  |             |          |      |  
|Distributions to partners                                                                  |  |             | (461,761 | )    |  
|Redemption of limited    partners                                                          |  |             |         |      |  
|Accounts    receivables-Commonwealth Capital Corp                                          |  |             | 91,216   |      |  
|Debt placement fee paid to    the General Partner                                          |  |             |         |      |  
|                                                                                           |  |             |          |      |  
|Net cash    (used in) financing activities                                                 |  |             | (370,545 | )    |  
|                                                                                           |  |             |          |      |  
|Net increase in cash and    cash equivalents                                               |  |             | 232,295  |      |  
|Cash and cash equivalents,    beginning of period                                          |  |             | 33,361   |      |  
|                                                                                           |  |             |          |      |  
|Cash and    cash equivalents, end of period                                                |  | $           | 265,656  |      | $
|                                                                                           |  |             |          |      |  




see accompanying notes to financial  statements


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NOTES TO FINANCIAL  STATEMENTS





|1. | Business                                            | Commonwealth    Income & Growth Fund II (the Partnership) is a limited partnership    organized in the Commonwealth of Pennsylvania to acquire, own and lease    various types of computer peripheral equipment and other similar capital    equipment, which will be leased primarily to U.S. corporations and    institutions.  Commonwealth Capital    Corp (CCC), on behalf of the Partnership and other affiliated partnerships,    acquires computer equipment subject to associated debt obligations and lease    agreements and allocates a participation in the cost, debt and lease revenue    to the various partnerships based on certain risk factors.  The Partnerships General Partner is    Commonwealth Income & Growth Fund, Inc. (the General Partner), a    Pennsylvania corporation which is an indirect wholly owned subsidiary of    CCC.  CCC is a member of the    Investment Program Association (IPA),
Financial Planning Association (FPA),    and the Equipment Leasing Association (ELA).     Approximately ten years after the commencement of operations, the    Partnership intends to sell or otherwise dispose of all of its computer    equipment, make final distributions to partners, and to dissolve.  Unless sooner terminated, the Partnership    will continue until December 31, 2006.
|-- | --------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Summary of    Significant    Accounting    Policies | Basis of Presentation
  
  The    financial information presented as of any date other than December 31 has    been prepared from the books and records without audit.  Financial information as of December 31    has been derived from the audited financial statements of  the Partnership, but does not include all    disclosures required by generally accepted accounting principles.  In the opinion of management, all    adjustments, consisting only of normal recurring adjustments, necessary for a    fair presentation of the financial information for the periods indicated have    been included.  For further    information regarding the Partnerships accounting policies, refer to the financial    statements and related notes included in the Partnerships annual report on    Form 10-K for the year ended December 31, 2003.  Operating results for the nine-month period ended September 30,    2003 are not necessarily indicative of financial results that may be
expected    for the full year ended December 31, 2003.                                                                                                                                                                                                                                                                                




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| |  | Revenue Recognition
  
  Through    September 30, 2003, the Partnerships leasing operations consist    substantially of operating leases and seven direct-financing leases.  Operating lease revenue is recognized on a    monthly basis in accordance with the terms of the lease agreement.  Unearned revenue from direct financing    agreements is amortized to revenue over the lease term.  Gains or losses on the sales of equipment    are recognized on the date of the sale agreement.
  
  The    Partnership reviews a customers credit history before extending credit and    establishes a provision for uncollectible accounts receivable based upon the    credit risk of specific customers, historical trends and other information.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Use of Estimates
  
  The    preparation of financial statements in conformity with generally accepted    accounting principles requires management to make estimates and assumptions    that affect the reported amounts of assets and liabilities and disclosure of    contingent assets and
  liabilities    at the date of the financial statements and the reported amounts of revenues    and expenses during the reporting period.     Actual results could differ from those estimates.                                                                                                                                                                                                                                                         
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Long-Lived Assets
  
  The    Partnership evaluates its long-lived assets when events or circumstances    indicate that the value of the asset may not be recoverable.  The Partnership determines whether an    impairment exists by estimating the undiscounted cash flows to be generated by    each asset.  If the estimated    undiscounted cash flows are less than the carrying value of the asset then an    impairment exists.  The amount of the    impairment is determined based on the difference between the carrying value    and the fair value.  The fair value is    determined based on estimated discounted cash flows to be generated by the    asset.  As of September 30, 2003,    there is no impairment.                       
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Depreciation    on computer equipment for financial statement purposes is based on the    straight-line method over estimated useful lives of four years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Intangible Assets
  
  Equipment    acquisition costs and deferred expenses, are amortized on a straight-line    basis over two- to-four year lives.     Unamortized acquisition fees and deferred expenses are charged to    amortization expense when the associated leased equipment is sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Cash and Cash Equivalents
  
  The    Partnership considers all highly liquid investments with a maturity of three    months or less to be cash equivalents.     Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         




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|   |                                                 | equivalents    have been invested in a money market fund investing directly in Treasury    obligations.                                                                                                                                                                                                                                                                                                                            
|-- | ----------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                 | Income Taxes
  
  The    Partnership is not subject to federal income taxes; instead, any taxable    income (loss) is passed through to the partners and included on their    respective income tax returns.                                                                                                                                                                                                                       
|   |                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                 | Taxable    income differs from financial statement net income as a result of reporting    certain income and expense items for tax purposes in periods other than those    used for financial statement purposes, principally relating to depreciation,    amortization, and lease income.                                                                                                                                         
|   |                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                 | Offering Costs
  
  Offering    costs are payments for selling commissions, dealer manager fees, professional    fees and other offering expenses relating to the syndication.  Selling commissions are 7% of the    partners contributed capital and dealer manager fees are 2% of the partners    contributed capital.  These costs have    been deducted from partnership capital in the accompanying financial    statements.
|   |                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                 | Net Income (Loss) Per Equivalent Limited    Partnership Unit
  
  The net income    (loss) per equivalent limited partnership unit is computed based upon net    income (loss) allocated to the limited partners and the weighted average    number of equivalent units outstanding during the period.                                                                                                                             
|   |                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                 | Reimbursable Expenses
  
  Reimbursable    expenses, which are charged to the Partnership by CCC in connection with the    administration and operation of the Partnership, are allocated to the    Partnership based upon several factors including, but not limited to, the    number of investors, compliance issues, and the number of existing leases.                                                                        
|   |                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | Net Investment in    Direct Financing    Leases | The    following lists the components of the net investment in direct financing    leases as of September 30, 2003 and December 31, 2002:                                                                                                                                                                                                                                                                                          




|                                             |  | September 30,2003 |         | December    31,2002 |  
|-------------------------------------------- |  | ----------------- | ------- | ------------------- | -
|                                             |  |                   |         |                     |  
|Minimum    lease payments receivable         |  | $                 | 194,373 |                     | $
|Less:    Unearned revenue                    |  |                   | 32,303  |                     |  
|                                             |  |                   |         |                     |  
|Net    investment in direct financing leases |  | $                 | 162,070 |                     | $
|                                             |  |                   |         |                     |  




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| |  | The following    is a schedule of future minimum rentals on noncancellable direct financing    leases at September 30, 2003:
| |  | ----------------------------------------------------------------------------------------------------------------------------




|                                            |  | Amount |        
|------------------------------------------- |  | ------ | -------
|                                            |  |        |        
|Three Months    Remaining December 31, 2003 |  | $      | 18,338 
|Year Ended    December 31, 2004             |  |        | 72,108 
|Year Ended    December 31, 2005             |  |        | 72,108 
|Year Ended    December 31, 2006             |  |        | 31,819 
|                                            |  |        |        
|                                            |  | $      | 194,373
|                                            |  |        |        




|4. | Computer    Equipment | The    Partnership is the lessor of equipment under operating leases with periods    ranging from 14 to 37 months.  In    general, the lessee pays associated costs such as repairs and maintenance,    insurance and property taxes.
  
  The    Partnerships share of the computer equipment in which they participate with    other partnerships at September 30, 2003 and December 31, 2002 was    approximately $1,660,000 and $1,645,000, respectively, which is included in    the Partnerships fixed assets on their balance sheet, and the total cost of    the equipment shared by the Partnership with other partnerships at September    30, 2003 and December 31, 2002 was approximately $2,813,000 and $2,765,000,    respectively.  The Partnerships share    of the outstanding debt associated with this equipment at September 30, 2003    and December 31, 2002 was approximately $550,000 and $801,000, respectively,    which is included in the Partnerships liabilities on the balance sheet, and    the total outstanding debt at September 30, 2003 and December 31, 2002    related to the equipment shared by the Partnership was approximately $917,000    and $1,353,000,
respectively.
|-- | --------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                       | The    following is a schedule of future minimum rentals on noncancellable operating    leases at September 30, 2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   




|                                        |  | Amount |        
|--------------------------------------- |  | ------ | -------
|                                        |  |        |        
|Three Months    ended December 31, 2003 |  | $      | 254,000
|Year Ended    December 31, 2004         |  |        | 646,000
|Year Ended    December 31, 2005         |  |        | 34,000 
|Year Ended    December 31, 2006         |  |        | 7,000  
|                                        |  |        |        
|                                        |  | $      | 941,000
|                                        |  |        |        




|5. | Related Party
  Transactions | Other Receivables
  
  As of    September 30, 2003, the Partnership has a non-interest bearing receivable    from CCC, a related party to the Partnership, in the amount of approximately    $216,000.  This receivable, as well as    any potential future receivables, was and will be made at the discretion of    the General Partner, per the Partnerships prospectus, and was substantially    advanced in 2001.  CCC, through its    indirect subsidiaries, including the General Partner of the Partnership,    earns fees based on revenues and new lease purchases from this fund.  CCC intends to repay the
|-- | ---------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




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|   |               | receivable    via the offsetting of equipment management and other fees, over the next    several fiscal years, with a minimum payment of $5,000 per month, commencing    January 1, 2003.  This receivable has    been reduced by approximately $91,000 during the nine months ended September    30, 2003 by the offsetting of equipment management and other fees.
|-- | ------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |               |                                                                                                                                                                                                                                                                                                                                                                      
|6. | Notes Payable | Notes    payable consisted of the following:                                                                                                                                                                                                                                                                                                                         




|                                                                                                                                                                                                                             |  | September30,    2003 |         | December    31,2002 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | ------------------- | -
|                                                                                                                                                                                                                             |  |                      |         |                     |  
|Installment    notes payable to banks; interest ranging from 7.25% to 9.75%, due in monthly    installments ranging from $72 to $5,408, including interest, with final    payments due from February through December 2003.  |  | $                    | 33,042  |                     | $
|Installment    notes payable to banks; interest ranging from 6.50% to 8.75%, due in monthly    installments ranging from $96 to $22,799, including interest, with final    payments due from February through November 2004. |  |                      | 665,584 |                     |  
|Installment    notes payable to banks; interest ranging from 6.25% to 6.75%, due in monthly    installments ranging from $240 to $1,875, including interest, with final    payments due from February through April 2005.    |  |                      | 88,832  |                     |  
|Installment    notes payable to banks, interest ranging from 5.95% to 6.50%: due in monthly    installments ranging from $507 to $1,892, including interest, with final    payments due June 2006.                           |  |                      | 169,906 |                     |  
|                                                                                                                                                                                                                             |  |                      |         |                     |  
|                                                                                                                                                                                                                             |  | $                    | 957,364 |                     | $
|                                                                                                                                                                                                                             |  |                      |         |                     |  




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| |  | These notes    are secured by specific computer equipment and are nonrecourse liabilities of    the Partnership.  Aggregate maturities    of notes payable for each of the periods subsequent to September 30, 2003 are    as follows:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|                                     |  | Amount |        
|------------------------------------ |  | ------ | -------
|                                     |  |        |        
|Three months ended December 31, 2003 |  | $      | 228,999
|Year ended    December 31, 2004      |  |        | 618,764
|Year ended    December 31, 2005      |  |        | 76,535 
|Year ended    December 31, 2006      |  |        | 33,066 
|                                     |  |        |        
|                                     |  | $      | 957,364
|                                     |  |        |        




|7. | Supplemental    Cash Flow    Information | Other noncash activities included in the determination of net income    (loss) are as follows:
|-- | ---------------------------------------- | ----------------------------------------------------------------------------------------------




|Nine months ended September 30,                                                                                                    |  |   | 2003    |  |   | 2002    | 
|---------------------------------------------------------------------------------------------------------------------------------- |  | - | ------- |  | - | ------- | 
|                                                                                                                                   |  |   |         |  |   |         | 
|Lease    income, net of interest expense on notes payable realized as a result of    direct payment of principal by lessee to bank |  | $ | 780,517 |  | $ | 865,622 | 
|                                                                                                                                   |  |   |         |  |   |         | 




| |  | No interest    or principal on notes payable was paid by the Partnership because direct    payment was made by lessee to the bank in lieu of collection of lease income    and payment of interest and principal by the Partnership.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| |  | Noncash    investing and financing activities include the following:
| |  | --------------------------------------------------------------------




|Nine months ended September 30,                                        |  | 2003 |        | 2002 |  
|---------------------------------------------------------------------- |  | ---- | ------ | ---- | -
|                                                                       |  |      |        |      |  
|Net book value of equipment converted to direct financing leases       |  | $    | 15,299 |      | $
|                                                                       |  |      |        |      |  
|Debt assumed    in connection with purchase of computer equipment      |  | $    |       |      | $
|                                                                       |  |      |        |      |  
|Debt paid    off in connection with extension of unearned lease income |  | $    |       |      | $
|                                                                       |  |      |        |      |  




|8. | Litigation | In June 2003, the Partnership, through CCC, reached a favorable    settlement in a lawsuit against a customer for failure to make monthly lease    payments based on the existing lease terms.     The settlement did not have a material adverse impact to the financial    statements of the Partnership.  As of    December 31, 2002, the Partnership had recorded a receivable from the    customer of approximately $404,000, net of an allowance of approximately    $330,000.  In July 2003, the    Partnership received approximately $405,000 in proceeds relating to this    receivable.
|-- | ---------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




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Item 2:  Managements Discussion  and Analysis of Financial Condition and Results of Operations





CRITICAL ACCOUNTING POLICIES





Financial  Reporting Release No. 60, which was released by the Securities and Exchange  Commission, requires all companies to include a discussion of critical  accounting policies or methods used in the preparation of financial  statements.  Our significant accounting  policies are described in Note 1 of the Notes to the Financial Statements.  The significant accounting policies that we  believe are the most critical to aid in fully understanding our reported  financial results include the following:





COMPUTER  EQUIPMENT





Commonwealth Capital Corp, on  behalf of the Partnership and other affiliated partnerships, acquires computer  equipment subject to associated debt obligations and lease revenue and  allocates a participation in the cost, debt and lease revenue to the various  partnerships based on certain risk factors. Depreciation on computer equipment  for financial statement purposes is based on the straight-line method over  estimated useful lives of four years.





REVENUE RECOGNITION





Through September 30, 2003, the  Partnerships leasing operations consist substantially of operating leases and  eight direct-financing leases.   Operating lease revenue is recognized on a monthly basis in accordance  with the terms of the lease agreement.   Unearned revenue from direct financing agreements is amortized to  revenue over the lease term. Gains or losses on the sales of equipment are  recognized on the date of the sale agreement.





The Partnership reviews a  customers credit history before extending credit and establishes a provision  for uncollectible accounts receivable based upon the credit risk of specific  customers, historical trends and other information.





LONG-LIVED  ASSETS





The Partnership evaluates its  long-lived assets when events or circumstances indicate that the value of the  asset may not be recoverable.  The  Partnership determines whether an impairment exists by estimating the  undiscounted cash flows to be generated by each asset.  If the estimated undiscounted cash flows are  less than the carrying value of the asset then an impairment exists.  The amount of the impairment is determined  based on the difference between the carrying value and the fair value.  Fair value is determined based on estimated  discounted cash flows to be generated by the asset.





Liquidity and Capital Resources





The Partnerships primary  sources of capital for the nine months ended September 30, 2003 and September  30, 2002 were from net proceeds received from sale of equipment totaling  $404,000 and $126,000, respectively, and cash from operations of $182,000 and  $465,000, respectively.  The primary  uses of cash for the nine months ended September 30, 2003 and September 30,  2002, were for capital expenditures for new equipment


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totaling $15,000 and $97,000,  respectively, and the payment of preferred distributions to partners of  $462,000 and $404,000, respectively.





For the nine month period ended  September 30, 2003, the Partnership generated cash flows from operating  activities of $182,000, which includes net income of $217,000, a gain on sale  of equipment totaling $305,000, and depreciation and amortization expenses of  $779,000. Other noncash activities included in the determination of net income  include direct payments of lease income by lessees to banks of $781,000.





For the nine month period ended  September 30, 2002, the Partnership generated cash flows from operating  activities of $465,000, which includes a net loss of $163,000, depreciation and  amortization expenses of $1,376,000, and unearned income of $117,000. Other  noncash activities included in the determination of net (loss) include direct  payments of lease income by lessees to banks of $866,000.





Cash is invested in money  market accounts that invest directly in treasury obligations pending the  Partnerships use of such funds to purchase additional computer equipment, to  pay Partnership expenses or to make distributions to the Partners.





In  June 2003, the Partnership, through CCC, reached a favorable settlement in a  lawsuit against a customer for failure to make monthly lease payments based on  the existing lease terms.  The  settlement did not have a material adverse impact to the financial statements  of the Partnership.  As of December 31,  2002, the Partnership had recorded a receivable from the customer of  approximately $404,000, net of an allowance of approximately $330,000.  In July 2003, the Partnership received  approximately $405,000 in proceeds relating to this receivable.





As of September 30, 2003, the  Partnership has a non-interest bearing receivable from CCC, a related party to  the Partnership, in the amount of approximately $216,000.  This receivable, as well as any potential  future receivables, was and will be made at the discretion of the General  Partner, per the prospectus, and was substantially advanced in 2001.  CCC, through its indirect subsidiaries, including  the General Partner of the Partnership, earns fees based on revenues and new  lease purchases from this fund.  CCC  intends to repay the receivable via the offsetting of equipment management and  other fees, over the next several fiscal years, with a minimum payment of  $5,000 per month, commencing January 1, 2003.   This receivable has been reduced by approximately $91,000 during the  nine months ended September 30, 2003 via the offsetting of equipment management  and other fees.





The Partnerships investment  strategy of acquiring computer equipment and generally leasing it under  triple-net leases to operators who generally meet specified financial  standards minimizes the Partnerships operating expenses.  As of September 30, 2003, the Partnership  had future minimum rentals on non-cancelable operating leases of  $254,000 for the balance of the year ending  December 31, 2003 and $687,000 thereafter.   At September 30, 2003, the outstanding debt was $957,000, with interest  rates ranging from 5.95% to 9.75%, and will be payable through June 2006.





The Partnerships cash from  operations is expected to continue to be adequate to cover all operating  expenses, liabilities, and preferred distributions to Partners during the next  12-month period.  If available Cash Flow  or Net Disposition Proceeds are insufficient to cover the Partnership expenses  and liabilities on a short and long term basis, the Partnership will attempt to  obtain additional funds by disposing of or refinancing


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Equipment, or by borrowing  within its permissible limits.  The  Partnership may, from time to time, reduce the distributions to its Partners if  it deems necessary.  Since the Partnerships  leases are on a triple-net basis, no reserve for maintenance and repairs are  deemed necessary.





The Partnerships share of the  computer equipment in which they participate with other partnerships at  September 30, 2003 and December 31, 2002 was approximately $1,660,000 and  $1,645,000, respectively, which is included in the Partnerships fixed assets  on their balance sheet, and the total cost of the equipment shared by the  Partnership with other partnerships at September 30, 2003 and December 31, 2002  was approximately $2,813,000 and $2,765,000, respectively.  The Partnerships share of the outstanding  debt associated with this equipment at September 30, 2003 and December 31, 2002  was approximately $550,000 and $801,000, respectively, which is included in the  Partnerships liabilities on the balance sheet, and the total outstanding debt  at September 30, 2003 and December 31, 2002 related to the equipment shared by  the Partnership was approximately $917,000 and $1,353,000, respectively.





Results of Operations





Three Months  Ended September 30, 2003 compared to Three Months Ended September 30, 2002





For the quarter ended September 30, 2003, the Partnership  recognized income of $301,000 and expenses of $383,000, resulting in a net loss  of $82,000.  For the quarter ended September  30, 2002, the Partnership recognized income of $668,000 and expenses of  $721,000, resulting in a net loss of $53,000.





Lease income decreased by 55%  to $301,000 for the quarter ended September 30, 2003, from $668,000 for the  quarter ended September 30, 2002, primarily due to the fact that more lease  agreements ended than new lease agreements acquired since the quarter ended  September 30, 2002.





The Partnership sold computer  equipment with a net book value of $35,000 for the quarter ended September 30,  2003, for a net loss of $13,000.  The  Partnership sold computer equipment with a net book value of $4,000 for the  quarter ended September 30, 2002, for a net loss of $1,000.





Operating expenses, excluding  depreciation, primarily consist of accounting, legal, outside service fees and  reimbursement of expenses to CCC for administration and operation of the  Partnership.  The expense decreased 52%  to approximately $90,000 for the quarter ended September 30, 2003, from  $189,000 for the quarter ended September, 2002, which is primarily attributable  to a decrease in the amount charged by CCC, a related party, to the Partnership  for the administration and operation of approximately $59,000, and an decrease  in remarketing fees of approximately $2,000, a decrease in insurance of  approximately $7,000, a decrease in recruiting fees of approximately $2,000, a  decrease in outside office services of approximately $20,000, a decrease in  accounting fees of approximately $3,000 and a decrease in legal fees of  approximately $2,000.





The equipment management fee is  approximately 5% of the gross lease revenue attributable to equipment that is  subject to operating leases. The equipment management fee decreased 55% to  approximately $15,000 for the quarter ended September 30, 2003,


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from $33,000 for the quarter  ended September 30, 2002, which is consistent with the decrease in lease  income.





Depreciation and amortization  expenses consist of depreciation on computer equipment and amortization of  equipment acquisition fees. The expenses decreased 28% to approximately  $246,000 for the quarter ended September 30, 2003, from $344,000 for the  quarter ended September 30, 2002 due to equipment and acquisition fees being  fully depreciated/amortized and not being replaced with as many new purchases.





The partnership did not record  bad debt expenses for the quarter ended September 30, 2003.  The partnership recorded bad debt expenses  of approximately $118,000 related to disputed accounts receivables balances for  the quarter ended September 30, 2002.





Interest expense decreased 47%  to $19,000 for the quarter ended September 30, 2003 from $37,000 for the  quarter ended September 30, 2002, primarily due to the decrease in debt  relating to the purchase of computer equipment.





Nine Months  Ended September 30, 2003 compared to Nine Months Ended September 30, 2002





For the nine months ended  September 30, 2003, the Partnership recognized income of $1,559,000 and  expenses of $1,342,000, resulting in net income of $217,000.   For the nine months ended September 30,  2002, the Partnership recognized income of $2,058,000 and expenses of  $2,221,000, resulting in a net loss of $163,000.





Lease income decreased by 39%  to $1,253,000 for the nine months ended September 30, 2003, from $2,057,000 for  the nine months ended September 30, 2002, primarily due to the fact that more  lease agreements ended than new lease agreements acquired since the nine months  ended September 30, 2002.





The Partnership sold computer  equipment with a net book value of $99,000 for the nine months ended September  30, 2003, for a net gain of $305,000.   The Partnership sold computer equipment with a net book value of  $127,000 for the quarter ended September 30, 2002, for a net loss of $300.





Operating expenses, excluding  depreciation, primarily consist of accounting, legal, outside service fees and  reimbursement of expenses to CCC for administration and operation of the  Partnership.  The expense decreased 2%  to approximately $428,000 for the nine months ended September 30, 2003, from  $436,000 for the nine months ended September, 2002, which is primarily  attributable to a decrease in the amount charged by CCC, a related party, to  the Partnership for the administration and operation of approximately $37,000,  a decrease in outside office services of approximately $20,000, a decrease in  conventions of approximately $4,000, a decrease in legal fees of approximately  $5,000, a decrease in accounting fees of approximately $11,000 and an increase  in remarketing fees of approximately $71,000.





The equipment management fee is  approximately 5% of the gross lease revenue attributable to equipment that is  subject to operating leases. The equipment management fee decreased 39% to  approximately $63,000 for the nine months ended September 30, 2003, from  $103,000 for the nine months ended September 30, 2002, which is consistent with  the decrease in lease income.


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Depreciation and amortization  expenses consist of depreciation on computer equipment and amortization of  equipment acquisition fees. The expenses decreased 43% to approximately  $779,000 for the nine months ended September 30, 2003, from $1,376,000 for the  nine months ended September 30, 2002 due to equipment and acquisition fees  being fully depreciated/amortized and not being replaced with as many new  purchases.





The partnership did not record  bad debt expenses for the nine months ended September 30, 2003.  The partnership recorded bad debt expenses  of approximately $186,000 related to disputed accounts receivables balances for  the nine months ended September 30, 2002.





Interest expense decreased 38%  to $74,000 for the nine months ended September 30, 2003 from $119,000 for the  nine months ended September 30, 2002, primarily due to the decrease in debt  relating to the purchase of computer equipment.





Item  3.  Quantitative and Qualitative Disclosures About Market Risk





The Partnership believes its  exposure to market risk is not material due to the fixed interest rate of its  long- term debt and its associated fixed revenue streams.





Item  4.  Controls and Procedures





The Chief Executive Officer and  A Financial Officer of the Partnership have conducted a review of the  Partnerships disclosure controls and procedures as of September 30, 2003.





The Companys disclosure  controls and procedures include the Partnerships controls and other procedures  designed to ensure that information required to be disclosed in this and other  reports filed under the Securities Exchange Act of 1934, as amended (the   Exchange Act) is accumulated and communicated to the Partnerships management,  including its chief executive officer and a financial officer, to allow timely  decisions regarding required disclosure and to ensure that such information is  recorded, processed, summarized and reported with the required time periods.





Based upon this review, the  Partnerships Chief Executive Officer and the A Financial Officer have  concluded that the Partnerships disclosure controls (as defined in pursuant to  Rule 13a-14 c promulgated under the Exchange Act) are sufficiently effective to  ensure that the information required to be disclosed by the Partnership in the  reports it files under the Exchange Act is recorded, processed, summarized and  reported with adequate timeliness.





Part II:   OTHER INFORMATION





Commonwealth  Income & Growth Fund II





| | Item 1. | Legal Proceedings.                                                                                                                                                                                                                                                                                                                                                                          
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| |         |                                                                                                                                                                                                                                                                                                                                                                                             
| |         | Commonwealth    Capital Corp filed a complaint on December 21, 2001 with Avon Products, Inc.    with the Federal District Court of the Eastern District of Pennsylvania, No.    01-C2-6915.  The complaint alleges    that the defendants illegally purchased/sold leased equipment without the    Partnerships authorization, along with suing for late fees on various lease    payments.




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| |         | In December    2002, the representatives of CCC, along with representatives from El Camino    (the original broker for the Avon lease) and consultants for Avon, met for a    reconciliation meeting.  This meeting    was designed to reconcile all accounting issues (rentals due) related to the    Avon lease.  A final reconciliation    was not submitted by all parties until around February 15, 2003.  At that time, CCC reconciled, via payments    histories, the amounts owed by each party.     A settlement conference with the judge was then scheduled for March 6,    2003.  Prior to the conference, CCC    submitted their reconciliation of amounts due.  At the conference, a reasonable settlement could not be reached    on various issues involved in the litigation.  Avon was granted another 90 days for discovery.
| | ------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |         | As of December 31, 2002, the Partnership had recorded a receivable    from Avon of approximately $404,000, net of an allowance of approximately    $330,000.  In June 2003,    a settlement was reached between all parties.  As part of the settlement, title to the equipment was    transferred to Avon. In July 2003,    the Partnership received approximately $405,000 in proceeds relating to this    receivable.                                                                                                                                                                                                                                                                                                                                                                                                                       
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Item 2. | Changes in Securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |         | Inapplicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Item 3. | Defaults Upon Senior Securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |         | Inapplicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Item 4. | Submission of Matters to a Vote of    Securities Holders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |         | Inapplicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Item 5. | Other Information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |         | Inapplicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Item 6. | Exhibits and Reports on Form 8-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | a)      | Exhibits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |         | 31.1 THE RULE 15d-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |         | 31.2  THE RULE 15d-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |         | 32.1 SECTION 1350 CERTIFICATION OF CEO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |         | 32.2 SECTION 1350 CERTIFICATION OF CFO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | b)      | Report on    Form 8-K:     None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                




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SIGNATURE





Pursuant to the requirements of  the Securities Exchange Act of 1934, the registrant has duly caused this report  to be signed on its behalf by the undersigned, thereunto duly authorized.





| | COMMONWEALTH    INCOME & GROWTH FUND II
| | ---------------------------------------
| |                                        
| |                                        




|November 10,    2003 | By:/s/ GEORGE S. SPRINGSTEEN
|-------------------- | ----------------------------
|Date                 | George S.    Springsteen    
|                     | President                   




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