Inventory Error

The following highly condensed income statements and balance sheets are available for Budget Stores for a two-year period. (All amounts are stated in thousands of dollars.)

Income Statements	2017					2016
Revenues	$20,008					$15,009
Cost of goods sold	13,050					9,984
Gross profit	$6,958					$5,025
Operating expenses	2,988					2,028
Net income	$3,970					$2,997

Balance Sheets	December 31, 2017			December 31, 2016
Cash	$1,653			$1,547
Inventory	4,200			3,468
Other current assets	2,521			1,992
Long-term assets	14,980			13,958
Total assets	$23,354			$20,965
Liabilities	$8,488			$6,999
Capital stock	4,995			4,995
Retained earnings	9,871			8,971
Total liabilities and stockholders' equity	$23,354			$20,965

Before releasing the 2017 annual report, Budgets controller learns that the inventory of one of the stores (amounting to $576,000) was inadvertently omitted from the count on December 31, 2016. The inventory of the store was correctly included in the December 31, 2017, count.

Required:

1. Prepare revised income statements for Budget Stores for each of the two years. Ignore the effect of income taxes. Enter answers in thousands of dollars.

Budget Stores
Income Statement
For the Years 2016 and 2017
	2017	2016
Revenues	$fill in the blank	$fill in the blank
Cost of goods sold	fill in the blank	fill in the blank
Gross profit	$fill in the blank	$fill in the blank
Operating expenses	fill in the blank	fill in the blank
Net income	$fill in the blank	$fill in the blank

Prepare revised balance sheets for Budget Stores for each of the two years. Ignore the effect of income taxes. Enter answers in thousands of dollars.

Budget Stores
Balance Sheet
For the Years 2016 and 2017
	12/31/17	12/31/16
Cash	$fill in the blank 451d610b2fe004d_1	$fill in the blank 451d610b2fe004d_2
Inventory	fill in the blank 451d610b2fe004d_3	fill in the blank 451d610b2fe004d_4
Other current assets	fill in the blank 451d610b2fe004d_5	fill in the blank 451d610b2fe004d_6
Long-term assets	fill in the blank 451d610b2fe004d_7	fill in the blank 451d610b2fe004d_8
Total assets	$fill in the blank 451d610b2fe004d_9	$fill in the blank 451d610b2fe004d_10
Liabilities	$fill in the blank 451d610b2fe004d_11	$fill in the blank 451d610b2fe004d_12
Capital stock	fill in the blank 451d610b2fe004d_13	fill in the blank 451d610b2fe004d_14
Retained earnings	fill in the blank 451d610b2fe004d_15	fill in the blank 451d610b2fe004d_16
Total liabilities and stockholders' equity	$fill in the blank 451d610b2fe004d_17	$fill in the blank 451d610b2fe004d_18

2. If Budget Stores did not prepare revised statements before releasing the 2017 annual report, would there be the amount of overstatement or understatement of net income for the two-year period?

Would there be an overstatement or understatement of retained earnings at December 31, 2017, if revised statements were not prepared?

3. If Budget does not restate its financial statements after discovering the inventory error, what impact will it have on the financial statements?