C. Richard Roose, Jr. and Betty B. Roose - Page 4

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               After the Daily Cash Report was finished, a deposit slip               
          would be completed to reflect the day's transactions, and                   
          Mr. Roose would usually make the bank deposit the following                 
          business day.  Mr. Roose also maintained the store's checkbook.             
          He recorded deposits on the check stubs and "looked at" the bank            
               Mrs. Roose used the Daily Cash Reports that were prepared by           
          Mr. Roose to complete entries in the Drug Topics book.  The Drug            
          Topics book compiled the daily information into month-by-month              
          income and expense reports.  Mrs. Roose prepared the Drug Topics            
          book at the end of each month or shortly thereafter.  Both the              
          Daily Cash Reports and the store's checkbook were used to record            
          expense items in the Drug Topics book.  Certain deposits not                
          reflected on the Daily Cash Reports appear in the Drug Topics               
          book entries prepared by Mrs. Roose.                                        
               Although Mr. Roose knew that Mrs. Roose relied on the Daily            
          Cash Reports to complete the Drug Topics book, some transactions            
          were omitted from the Daily Cash Reports.  The store accepted               
          manufacturers' coupons and received rebates in the form of checks           
          from the manufacturers.  The amount of the coupon rebates was not           
          included in the Daily Cash Report total.  The amounts received              
          from the coupons were not deposited into the store's business               
          account at Middlefield Banking Co. (the Middlefield account) but            
          were instead deposited into various accounts at Peoples Savings,            
          some of which were in the names of petitioners' children.                   

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Last modified: May 25, 2011