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petitioners completed a 3-month bookkeeping class directed solely
at learning an accounting system for use in a drugstore setting.
Mr. Roose owned and operated Roose Drug Store (the store) as
a cash basis sole proprietorship during the years in issue. He
worked 60 to 70 hours per week in the store, and Mrs. Roose
worked 20 to 30 hours per week.
Petitioners shared the accounting and bookkeeping
responsibilities of the store. The store used a single-entry
accounting system known as "Drug Topics", created especially for
use by drugstores. At the end of a typical day, Mr. Roose would
close out one of the two cash registers in the store. The totals
from the first register would be entered in the other cash
register. The second register would then be closed out,
reflecting all of the day's activities. Mr. Roose used the
information from this cash register tape to prepare the Daily
Cash Report. The Daily Cash Report is a form containing various
blanks to be filled in with information from the cash register
tape. Various items were represented on the Daily Cash Report,
including "Received on Account", "Cash Paid Out", and five
categories of "Cash Sales". Mr. Roose generally recorded all of
the sales under "Cash Sales (I)" and the amounts received on
account through in-person payments under "Cash Sales (II)". The
"Received on Account" blank on the Daily Cash Report form was not
utilized.
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Last modified: May 25, 2011