A guy walks into a store and steals a $100 without the owner knowing. He then buys $70 worth of goods using the $100 and the owner gives $30 in change. How much money did the owner lose?

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COGS + $30. [In this case, COGS= Cost of Goods Stolen.]. :)

likefunny

^ hey that's Albert Einstein's quote!

funny

This old trick question I think really depends on how you define “lost”. About half of the people go straight to the theft because the subsequent sale is just normal business that could happen to anyone not just the thief. The other half of the people look at the entire scenario. If lost is defined as non-operating income/loss, then yes he lost $100 due to the theft. Then he made whatever money (let’s say margin is 20%), i.e. $14, in the sale, which is operating income. Then net income/loss wise he lost 86, which is what the other posts are saying ($30 + 70*80%). I chose to ignore tax as other people wisely pointed out. Why? I’m in audit and I’ll engage our provision tax specialists to do it😝

likefunny
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Immaterial. Waive on further testing.

likefunny

How is nobody here catching that the owner now has to pay income tax on the net income from the $70 in sales?

likefunny

Hasn’t lost the tax dollars yet. Once he reconciled his books and realizes he was robbed, he would claim a deduction for the loss, so the taxes are a benefit.

likefunny

He took $100 and then gave it back = net zero. In exchange for the stolen $100, the thief got $30 of cash and a good priced at $70. Owner lost the $30 of cash and the cost of the $70 product.

likehelpful

I just lost 5 minutes of my life

likefunnysmart

1984. my buddies and inwpuld cruise around sat nite from 9pm tk midnite in a 68 old cutless. then wr would go to burger king where one of our buddies worked. this is pre computer. we wpuld give him 10 bucks, he would fill a bag of food from the burger/fries bin, and give us back a 5 and 5 singles. How much food did we eat? gasoline was 98 cents a gallon. this was queens, nyc

likefunnyhelpful

What did I just read

funnylike

Just because the item was priced at $70 doesn’t mean that’s what the owner paid for it. There is likely an upcharge on the sticker price to make a bit of a profit. Could be that the owner lost $30 + the cost of the price paid for the item initially, and may be more like $80 lost in total.

likeupliftingsmart

$100

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$30 + (70 * (1/GM%))

likefunny

100

likeuplifting

If he’s asking the question it’s not immaterial. 😂

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And we’re still waiting for EY1’s words of wisdom....

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🤦‍♀️

funny

Dr. Petty Theft Expense 100
Cr. Cash 100

Dr. Cash 70
Cr. Revenue 70

Dr. COGS xx
Cr. Inventory xx

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What about the lost time the owner has spent arguing with his auditors about it, and the extra fees he pays for the change order?

It was $100....has to be immaterial, but I do make a valid point

100 + 30 received back = $130 total loss to the store owner...What say you?

That you are headed for a PIP soon

likefunny

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