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 2016 2015 Revenues $20,000 $15,000 10,000 Cost of goods sold Gross profit Operating expenses 13,000 $7,000 $5,000 3,000 2,000 Net income $4,000 $3,000 December 31, 2016 December 31, 2015 Balance Sheets Cash $1,700 $1,500 Inventory 4,200 2,500 Other current assets 3,500 2,000 14,000 Long-term assets 15,000 Total assets $23,400 $21,000 Liabilities $8,500 $7,000 Capital stock 5,000 5,000 9,900 Retained earnings 9,000 Total liabilities and stockholders' equity $23,400 $21,000 on December 31, 2015. The inventory of the store was correctly Before releasing the 2016 annual report, Budget's controller learns that the inventory of one of the stores (amounting to $600,000) was inadvertently omitted from the included in the December 31, 2016, count. 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 2015 and 2016 2016 2015 Revenues Cost of goods sold s $ Gross profit Operating expenses $ $ 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 2015 and 2016 12/31/16 12/31/15 Cash Inventory Other current assets Long-term assets Total assets $1 $ Liabilities Capital stock Retained earnings Total liabilities and stockholders' equity 2. If Budget Stores did not prepare revised statements before releasing the 2016 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 December 31, 2016, 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