8.5.2

In May 20X5, the newly appointed controller of Butch Baking Corporation conducted a thorough review of past accounting, particularly of transactions that exceeded the company's normal level of materiality. As a result of his review, he instructed the company's chief accountant to correct two errors: a. In 20X2, the company made extensive improvements to the baking process and installed a substantial amount of new equipment. The entire cost of the process improvements and equipment was accidentally charged to income as restructuring expense in 20X2. However, the equipment should have been capitalized and added to the factory equipment account. The cost of the equipment was $1,500,000. Butch depreciates its factory equipment on the straight-line basis over 10 years. A full year's depreciation is charged in the year that equipment is acquired. b. A year-end cut-off error occurred in 20X3. A large shipment of nonperishable supplies arrived from China on the last day of 20x3 and had been left in the shipping containers outside the main plant. As a result, the supplies were recorded as received in 20X4 and had not been included in the year-end 20X3 inventory count. The account payable also had not been recorded in 20X3. The supplies cost $123,000. Like most companies, Butch Baking presents a five-year financial summary in its annual report. The 20X4 summary contained the following information (in thousands of dollars, except EPS): Gross revenue Net income Total assets Total liabilities Net assets Earnings per share* 2exe $ 14,100 1,870 133,000 47,600 85,400 $ 18.70 20X1 $ 15,500 2,050 151,000 63,400 87,600 20.50 20x2 $ 16,500 800 139,290 65,870 73,420 $ 8.00 20X3 $ 16,100 2,160 138,000 65,000 73,000 $ 21.60 20X4 $ 14,800 1,730 125,000 59,000 66,000 $ 17.30 *100,000 shares outstanding Required: 1. Not available in Connect. 2. Revise the financial summary. (Enter answer in thousands, not in whole Canadian dollars. Round EPS answers to 1 decimal place.) 200 20X1 20X2 20X3 20X4 Gross revenue $ 14,100 $ $ 16,500 $ 16,100 $ 14,800 15,500 2,050 Net income 800 2,160 1,730 Adjusted net income 1,870 2,120 133,000 Total assets 151,000 139,290 138,000 125,000 Adjusted total assets Total liabilities 47,600 63,400 65,870 65,000 59,000 Adjusted total liabilities Net assets Earnings per share