- 25 - the subsidiaries, because Moore felt that this would be advantageous to petitioner for financial reporting purposes. This resulted in a writeoff of the entire balance of petitioner's trade account receivables for the fiscal year ended June 30, 1989. For 1990, Weaver recorded the incentive payments as a credit to unit receivables and a debit to bad debts on petitioner's books. Moore did not instruct Weaver how to record the incentive payments for 1990. Weaver believed the credit to unit receivables was the correct entry on petitioner's books because the incentive was being matched to the sales of units as reflected in the unit receivables. He thought a journal entry debiting sales, which petitioner had done in prior years with a credit memo, would not be proper without a credit memo. Golden supervised Axley & Rode's preparation of petitioner's financial statements for its fiscal years ended June 30, 1989, and 1990. Even before he became managing partner of the Foretravel account in 1987, Golden knew that petitioner had a rebate policy. After the audit group from Axley & Rode completed the financial statements, the relevant information was turned over to Axley & Rode's tax department to prepare the tax returns. Golden then reviewed the completed tax returns. For the years in issue, Golden was aware that the account Weaver labeled as bad debts also contained the rebates to the various dealerships. Golden treated the bad debt account as aPage: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Next
Last modified: May 25, 2011