Clever, Inc., is a car manufacturer. Its 2011 income statement is as follows: Clever, Inc. Income Statement

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Clever, Inc., is a car manufacturer. Its 2011 income statement is as follows:

Clever, Inc. Income Statement For the Year Ended
December 31, 2011
Sales revenue .......... $20,000
Less cost of goods sold ...... 10,000
Gross margin ......... $10,000
Expenses ............ 8,000
Net income .......... $ 2,000

Alexander, Inc., is a car rental agency based in Florida. Its 2011 income statement is as follows:
Alexander, Inc. Income Statement For the Year Ended
December 31, 2011
Sales revenue .............. $20,000
Expenses ............... 15,000
Net income .............. $ 5,000

During 2011, both Clever, Inc., and Alexander, Inc., incurred a $1,000 fraud loss.
1. How much additional revenue must each company generate to recover the losses from the fraud?
2. Why are these amounts different?
3. Which company will probably have to generate less revenue to recover the losses?

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Related Book For  book-img-for-question

Fraud examination

ISBN: 978-0538470841

4th edition

Authors: Steve Albrecht, Chad Albrecht, Conan Albrecht, Mark zimbelma

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