Chong-Kak and Sang-Ok Lee - Page 5

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          Mr. Lee managed Hamalee's warehouse operation, reviewed its                 
          accounting records and receipts, monitored its purchase and sales           
          orders, collected its receivables, effectuated its banking                  
          transactions, and signed all of Hamalee's tax returns.  Mrs. Lee            
          dealt with Hamalee's customers, took its sales orders, checked              
          its deliveries, collected and accounted for moneys received by              
          its delivery people, and helped manage its financial records.               
          Mrs. Lee and Ms. Chong maintained Hamalee's accounting records              
          and receipts.  Mr. Lee and Mrs. Lee were the only individuals               
          authorized to sign checks for Hamalee.                                      
               Hamalee's purchases, sales, and payables were primarily                
          transacted in cash.  Hamalee kept its business records in two               
          separate sets of books.  The first set (the actual books)                   
          contained all of Hamalee's sales, listing each sale in                      
          chronological order and referencing whether each sale was paid in           
          cash or by check.  The second set (the tax books) showed all of             
          Hamalee's sales that were paid by check and some of the sales               
          that were paid in cash.  Entries in the tax books, which were the           
          only books provided to the preparers of Hamalee's tax returns,              
          were the only sales reported for tax purposes.  Entries in the              
          tax books were underlined in red ink in the actual books, and an            
          invoice number was handwritten in the actual books next to each             

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Last modified: May 25, 2011