SHORT CASES
Case I Clever, Inc., is a car manufacturer. Its 2015 income statement is as follows:
Clever, Inc. Income Statement for the Year Ended December 31, 2015
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 2015 income statement is as follows:
Alexander, Inc. Income Statement for the Year Ended December 31, 2015
Sales revenue $20,000
Expenses 15,000
Net income 5,000
During 2015, both Clever, Inc., and Alexander, Inc., incurred a $1,000 fraud loss.
- How much additional revenue must each company generate to recover the losses from the fraud?
- Why are these amounts different? 3. Which company will probably have to generate less revenue to recover the losses?
