Background and Content:

The following financial data was collected during a fraud investigation:

Year 1 Year 2 Year 3

Assets:

Residence $280,000 $280,000 $280,000

Automobile 18,000 45,000 45,000

CD 5,000 15,000 15,000

Cash 8,000 8,000 2,000

Stock portfolio 5,000 15,000 15,000

Boat 15,000 15,000

Liabilities:

Mortgage 100,000 80,000 20,000

Auto loan 24,000 60,000 20,000

Other loan 6,000

Income:

Salary 50,000 55,000 60,000

Investment 2,000 5,000 5,000

Expenses:

Mortgage expense 36,000 32,000 18,000

Auto expense 10,000 9,000 9,000

Living expenses 30,000 30,000 60,000

Assessment Tasks:

Answer both questions below.

1. Calculate the amount of unknown income using the numbers given above.

2. Critically explain whether it appears that a possible fraud exists. In your answer, critically explain other possible explanations for the unknown income.